passive income

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pages: 290 words: 72,046

5 Day Weekend: Freedom to Make Your Life and Work Rich With Purpose by Nik Halik, Garrett B. Gunderson

Airbnb, bitcoin, Buckminster Fuller, business process, clean water, collaborative consumption, cryptocurrency, delayed gratification, diversified portfolio, en.wikipedia.org, estate planning, Ethereum, fear of failure, fiat currency, financial independence, glass ceiling, Grace Hopper, Home mortgage interest deduction, Isaac Newton, litecoin, Lyft, market fundamentalism, microcredit, minimum viable product, mortgage debt, mortgage tax deduction, Nelson Mandela, passive income, peer-to-peer, peer-to-peer rental, Ponzi scheme, quantitative easing, Ralph Waldo Emerson, ride hailing / ride sharing, sharing economy, side project, Skype, TaskRabbit, traveling salesman, uber lyft

I am wholeheartedly committed to achieving my 5 Day Weekend and living my life to its fullest. Here’s how I’m going to achieve it. I plan to achieve my 1:1 Passive Income Ratio by earning $______________ in passive income by ______________. I plan to achieve my 2:1 Passive Income Ratio by earning $______________ in passive income by ______________. I plan to achieve my 5:1 Passive Income Ratio and be com­pletely financially independent by earning $______________ in passive income by ______________. I plan to achieve my 10:1 Passive Income Ratio and have a sustainable amount of financial wealth by earning $_________ in passive income by ______________. To review passive income ratios, go to chapter 4. Signature: ______________________________________ Date: ______________ Go to our website to download and print this worksheet at 5DayWeekend.com.

See Sharelord Strategy Orman, Suze overrides owner financing, and loans for real estate investments P Palmer, Stephen partnerships, and loans for real estate investments passion, and entrepreneurial opportunities and Momentum investments passive income, Active/Passive Income Scale and entrepreneurship and freedom and Growth investments and income growth step and Information Age and investment resources and Momentum investments ongoing management requirements and Passive Income Ratio Passive Income Score Sheet and passive vs. active income streams and real estate investments and tax lien certificates and wealth creation step Passive Income Ratio (PIR) Passive Income Score Sheet Passport codes, Bank Strategy Cash Flow/ROI worksheet cryptocurrencies and 5DayWeekend.com 5 Day Weekend Passport resources Idea Optimizer Income Opportunity Score Sheet and Passive Income Ratio and Passive Income Score Sheet Rockefeller Formula Sharelord Strategy tax lien certificates Your 5 Day Weekend Plan Contract Your Debt Free Plan Your Entrepreneurial Income Plan Your Freedom Lifestyle Plan Your Investing Plan Your Power Up!

Your Earnings and Expenses How much net active money are you earning? How much are your monthly minimum expenses? How much net passive money are you earning? Your Goals When do you want to achieve your 1:1 Passive Income Ratio (earning enough passive income to cover your monthly expenses)? Target date? What is your goal for achieving a 2:1 Passive Income Ratio (earning twice as much passive income to cover your expenses)? Target date? What is your goal for achieving financial independence with a 5:1 Passive Income Ratio? Target date? What is your goal for achieving sustainable financial wealth with a 10:1 Passive Income Ratio? Target date? Go to our website to download and print this worksheet at 5DayWeekend.com. Code: P2 “If you see it in your mind, you will hold it in your hand.” —BOB PROCTOR PART II: THE FOUNDATION KEEP MORE MONEY Is being rich only about earning more money?


pages: 44 words: 13,346

Extreme Early Retirement: An Introduction and Guide to Financial Independence (Retirement Books) by Clayton Geoffreys

asset allocation, dividend-yielding stocks, financial independence, index fund, passive income, risk tolerance

In conclusion, you really want to set realistic goals and start doing any of these methods in order to achieve those goals. How to Generate Passive Income Sources Being able to generate passive income from different sources is one of the strategies that everyone wishes to employ. It may take some time before you are able to generate a significant amount of cash inflow, but you have to carry on with an upward thrust and steady momentum. Generating passive income is especially great if you are aiming for extreme early retirement because the perfect time to begin creating passive income is when you are still in your mid 20’s to early 30’s or anytime in your life where you are not burdened with financial problems and obligations. The idea behind creating passive income is to start with what you (hopefully) have with you, which is your savings. You can only begin to tweak your finances if you have something to work with.

On a similar note, you can also take a look at real estate investment trusts (REITS) which make for a terrific source of passive income. People tend to forget that the money they earn from the different sources of passive income should be placed elsewhere for further investments or savings. It is vital not to withdraw any money from your passive income. The more you make that money difficult for you to reach or withdraw from, the better. Having passive income does not necessarily mean you can just sit around at a tropical beach sipping on cold beverages, and while you can opt to do that if you are in desperate need for a treat, you should be giving your cash inflow some attention and work, if any is needed. Getting started with earning passive income does not always require you to go on a head-on collision with financial jargons and standardized systems.

The cheap life you are trying to avoid will still get back at you in the form of debt, long hours at work, stress, and the probability that you might still be working past the age of 65. There is another method which you can live with and it is through generating passive income. Throughout the next pages, you will be learning more about passive income but the basic idea is to couple your active income with various sources of passive income. Two of the most common sources that early retirees can live with are dividend-yielding stocks and rental properties. However, every source of passive income requires an investment and nearly all kinds of investments involve risk. It is important for you to calculate your risk tolerances and consider safer options so you do not end up burning your savings. 5 Reasons You Should Consider Extreme Early Retirement You Will Have More Time Enjoying the Goodness in Life The average age when people retire is 65 or 70, and if you think about it, people spend more time working instead of living.


pages: 621 words: 123,678

Financial Freedom: A Proven Path to All the Money You Will Ever Need by Grant Sabatier

"side hustle", 8-hour work day, Airbnb, anti-work, asset allocation, bitcoin, buy and hold, cryptocurrency, diversified portfolio, Donald Trump, financial independence, fixed income, follow your passion, full employment, Home mortgage interest deduction, index fund, loss aversion, Lyft, money market fund, mortgage debt, mortgage tax deduction, passive income, remote working, ride hailing / ride sharing, risk tolerance, Skype, stocks for the long run, stocks for the long term, TaskRabbit, the rule of 72, time value of money, uber lyft, Vanguard fund

As you’ve already learned, the connection between money and time doesn’t need to be linear—you can build a business that makes a lot of money but requires few (if any) employees and very little of your time. These are known as passive income businesses because you can make money without having to do a lot of active work. If you can find a business or investment that generates consistent reliable passive income (like rental income or stock dividends), then you can even make enough money to offset or cover your monthly expenses. Once you have reliable monthly passive income that you can live on, you’ve effectively reached financial independence. Another example of a passive income business is building online courses: you spend time creating and packaging the content, and then you sell it. While you can actively sell your course or knowledge, it can also generate passive income when people find it and buy it online. I know a bunch of people who’ve created online courses on a niche topic, like taking care of orchids, repairing guitars, or even launching books, who are able to completely live off the income of a course they created over five years ago.

Given that you have only a limited amount of time, the most lucrative side hustles are ones that generate passive income—that is to say, money you can earn without actively having to do anything. This is why scaling your business is so lucrative; it allows you to make money in your sleep (while your employees walk dogs, babysit, or whatever else). Passive income is amazing because it completely disrupts the traditional idea that you need to trade your time for money. You can build a passive income business with or without employees. But passive income side hustles can be tough to build (there’s no such thing as free money, after all). Many will require significant setup time and then a solid marketing/sales strategy. A good way to build a passive income stream is by selling something that you spend a little time creating but that people can buy for a long time without you having to put in much (if any) additional work.

Net worth—Your net worth is the difference between your assets (that is, things that have value like cash, your home if you own it, and investments) minus your liabilities (that is, any kind of debt). Your net worth is the most important personal finance number for you to track on a regular basis. I track mine daily, and you should, too. Or at least once a week. Passive income—The holy grail of moneymaking, passive income sources make money that requires little to none of your time. While passive income can take a lot of time to set up, the long-term return is often worth it. Examples of passive income include rental income, blogging income, online course income, and drop-ship income. But stock investing income is the ultimate passive income, since it requires very little setup and, due to compounding, generates increasingly large returns over time. This is the main strategy the wealthy use to both get and stay rich. Real hourly rate—The amount of money you are actually paid after factoring in the impact of taxes and the additional time (and money) required to do the job, such as getting ready, commuting, and buying clothes for work.


pages: 199 words: 57,599

Secrets of the Millionaire Mind by T. Harv Eker

Buckminster Fuller, Build a better mousetrap, Donald Trump, fear of failure, high net worth, Maui Hawaii, Parkinson's law, passive income

I can’t overemphasize the importance of creating passive income structures. It’s simple. Without passive income you can never be free. But, and it’s a big but, did you know that most people have a tough time creating passive income? There are three reasons. First, conditioning. Most of us were actually programmed not to earn passive income. When you were somewhere between thirteen and sixteen years old and you needed money, what did your parents tell you? Did they say, “Well, go out there and earn some passive income?” Doubtful! Most of us heard, “Go to work,” “Go get a job,” or something to that effect. We were taught to “work” for money, making passive income abnormal for most of us. Second, most of us were never taught how to earn passive income. In my school, Passive Income 101 was another subject that was never offered.

Notice there is a good chance that your desired lifestyle is going to cost money. Therefore, to be “free,” you will need to earn money without working. We refer to income without work as passive income. To win the money game, the goal is to earn enough passive income to pay for your desired lifestyle. In short, you become financially free when your passive income exceeds your expenses. I have identified two primary sources of passive income. The first is “money working for you.” This includes investment earnings from financial instruments such as stocks, bonds, T-bills, money markets, mutual funds, as well as owning mortgages or other assets that appreciate in value and can be liquidated for cash. The second major source of passive income is “business working for you.” This entails generating ongoing income from businesses where you do not need to be personally involved for that business to operate and yield an income.

This time I got to take woodworking and metalworking (notice both still entailed “working”) and make the perfect candleholder for my mom. Since we didn’t learn about creating passive income structures in school, we learned it elsewhere, right? Doubtful. The end result is that most of us don’t know much about it, and therefore don’t do much about it. Finally, since we were never exposed to or taught about passive income and investing, we have never given it much attention. We have largely based our career and business choices on generating working income. If you understood from an early age that a primary financial goal was to create passive income, wouldn’t you reconsider some of those career choices? I’m always recommending to folks choosing or changing their business or career to find a direction where generating streams of passive income is natural and relatively easy. This is especially important today because so many people work in service businesses where they have to be there personally to make money.


pages: 202 words: 72,857

The Wealth Dragon Way: The Why, the When and the How to Become Infinitely Wealthy by John Lee

8-hour work day, Albert Einstein, barriers to entry, Bernie Madoff, butterfly effect, buy low sell high, California gold rush, Donald Trump, financial independence, high net worth, intangible asset, Kickstarter, Mark Zuckerberg, negative equity, passive income, payday loans, self-driving car, Snapchat, Stephen Hawking, Steve Jobs, stocks for the long run, stocks for the long term, Tony Hsieh, Y2K

If you are not taking the greatest care of your most valuable asset, you can have all the money you want in the bank, but your worth will never reach its full potential. So step one of your plan is invest in appreciable assets, starting with the first and most important one…you! Passive Income Generation The most obvious source of passive income when you are building a property portfolio is your rental income. That is half the purpose (after the capital gains from appreciation) of owning investment property. But there are more ways to create passive income. You could start a business. If you are not ready for that step yet, you could look at trading the money markets. In Goals to Gold: Trading the Football Pitch for the Financial Markets, ex-footballer Lee Sandford shows us how he created a healthy passive income when his football career ended by learning to trade the financial markets. We love to criticize the huge salaries of footballers, but we forget that their careers are fleeting.

I opened the book on the tube on the way home and didn't put it down for two days. I was gripped. It was my first introduction to the concept of passive income, and I became obsessed with it. Darren and I could not stop talking about how we were going to achieve our new goals of creating a passive income source that would allow us to keep building our wealth indefinitely. I could hardly believe that so much financial security and freedom was available to me and I became 100 percent focused on working out how I could make it happen. During the months that followed, all Darren and I did was research the topic. We attended countless seminars and trawled the Internet looking for new strategies for building passive income. Of course the one that consistently stood out was earning a rental income from a property portfolio, so we concentrated our efforts on learning everything we could about property investment.

People risk their money investing in technology, spending huge sums on research and development, and going through successes and failures, so that we can enjoy new innovations such as smartphones and (coming sooner than you think) self-driving cars. In Without Risk There's No Reward, Bob Mayer tells many anecdotes to show how his booming property business could not have been built without taking huge risks. Step two of your plan should be to create a passive income from rental income and through trading the money markets, with a possible long-term view to creating a passive income from a business. Business Creation and Brand Building Does building a business sound like hard work? It is. But it is a highly effective way of creating passive income, as well as building a potentially appreciable asset. Remember that assets can be tangible or intangible. A brand is an intangible asset. Coca-Cola's huge worth is based on its brand, not the actual value of the contents of its products. Knowledge is an intangible asset.


pages: 386 words: 116,233

The Millionaire Fastlane: Crack the Code to Wealth and Live Rich for a Lifetime by Mj Demarco

8-hour work day, Albert Einstein, AltaVista, back-to-the-land, Bernie Madoff, bounce rate, business process, butterfly effect, buy and hold, cloud computing, commoditize, dark matter, delayed gratification, demand response, Donald Trump, fear of failure, financial independence, fixed income, housing crisis, Jeff Bezos, job-hopping, Lao Tzu, Mark Zuckerberg, passive income, passive investing, payday loans, Ponzi scheme, price anchoring, Ronald Reagan, upwardly mobile, wealth creators, white picket fence, World Values Survey, zero day

Whether I was watching Jerry Springer or jet skiing in Jamaica, the system was built to be its own machine-a living, breathing entity that did the dirty work for me. My system was a surrogate and traded its time. I owned my time instead of time owning me. Passive Income: The Holy Grail to Retirement The buzzword in moneymaking circles is “passive income”-earning income while not working. While retired, I receive checks every month like clockwork and I don't lift a finger. Passive income is a successful divorce from the “work for-money” equation indigenous to the Slowlane. The beauty of passive income is it doesn't care if you're 20 years old or 80. If your monthly income exceeds your lifestyle expenses including taxes, guess what? You're retired! The Fastlane Roadmap is engineered for two purposes. It's engineered to create a passive income stream to the excess of your expenses and lifestyle desires, and to make financial freedom a reality, exclusive of age.

Savers are winners because they become owners in companies. Savers are winners because they become producers and build assets. Open your wallet and look at a dollar. One buck. It doesn't buy much but it is the embryonic start to a passive income stream. One dollar has the power to give you a nickel of passive income for life. Yes, for life. While one nickel buys squat, it unlocks the DNA implicit in money-it's fully passive. I retired in my thirties because of this simple reality. I'm a lender, and when you have a lot of money to lend, you live free because passive income arrives every month. If you had $10 million and lent it at a mere 5% interest, you'd enjoy a passive income of $41,666 every single month. At 8% your monthly income would be $66,666 per month-fully passive. Over $60,000 every month! This is WITHOUT touching the principal. You can do this for years and still have 10 million dollars left over!

The point of this illustration is to show that the rich aren't using compound interest to get wealthy; they're using it for income and liquidity. A 5% tax-free yield on $10 million suddenly creates a $500,000 per year passive income. Like a tidal wave at the seashore, compound interest rears excruciating force when pitted against large sums of money. This is where money transforms into a fully passive income stream. As for earning your $10 million, that solution lies in exponential leveraged growth stemming from a Fastlane business-net income plus asset value-NOT in expenses, NOT in the stock market, and NOT in a job. Chapter Summary: Fastlane Distinctions One saved dollar is the seed to a money tree. A mere 5% interest on $10 million dollars is $40,000 a month in passive income. A saved dollar is the best passive income instrument. Fastlaners (the rich) don't use compound interest or the markets to get wealthy but to create income and preserve liquidity.


pages: 2,045 words: 566,714

J.K. Lasser's Your Income Tax by J K Lasser Institute

Affordable Care Act / Obamacare, airline deregulation, asset allocation, business cycle, collective bargaining, distributed generation, employer provided health coverage, estate planning, Home mortgage interest deduction, intangible asset, medical malpractice, medical residency, money market fund, mortgage debt, mortgage tax deduction, passive income, Ponzi scheme, profit motive, rent control, Right to Buy, telemarketer, transaction costs, urban renewal, zero-coupon bond

Hillman’s plight is lamentable, but as the Fourth Circuit ruled, relief can only come from Congress if the IRS does not liberalize its regulation on self-charged expenses. 10.9 Passive Income Recharacterized as Nonpassive Income There is an advantage in treating income as passive income when you have passive losses that may offset the income. However, the law may prevent you from treating certain income as passive income. The conversion of passive income to nonpassive income is technically called “recharacterization.” This may occur when you do not materially participate in the business activity, but are sufficiently active for the IRS to consider your participation as significant. Recharacterization may also occur when you rent property to a business in which you materially participate, rent nondepreciable property, or sell development rental property. - - - - - - - - - - Caution “Recharacterization” of Passive Income Gain on the sale of property used in a passive activity may be recharacterized as nonpassive income if the property was formerly used in a nonpassive activity (10.16)

She does not materially participate in any of the activities during the year but participates in Activity A for 105 hours, in Activity B for 160 hours, and in Activity C for 125 hours. Her net passive income or loss from the three activities is: Carol’s passive activity gross income from significant participation passive activities of $2,200 exceeds passive activity deductions of $1,500. A ratable portion of her gross income from significant participation activities with net passive income for the tax year (Activities A and C) is treated as gross income that is not from a passive activity. The ratable portion is figured by dividing: 1. The excess of her passive activity gross income from significant participation over passive activity deductions from such activities (here $700) by 2. The net passive income of only the significant participation passive activities having net passive income (here $1,000). The ratable portion is 70%. Thus, $280 of gross income from Activity A ($400 × 70%) and $420 of gross income from Activity C ($600 × 70%) is treated as nonpassive gross income.

Losses disallowed by the passive activity rules are suspended and carried forward to later taxable years and become deductible only when passive income is realized or substantially all of the activity is sold. Casualty and theft losses are not passive losses unless they are of the type usually occurring in a business, such as shoplifting theft losses. On your tax return, passive income items and allowable deductible items are reported as regular income and deductions. For example, rental income and allowable deductions are reported on Schedule E. However, before you make these entries, you may have to prepare Form 8582, which identifies your passive income and losses and helps you to determine whether passive loss items are deductible. At-risk rules generally limit losses for an activity to your cash investment and loans for which you are personally liable, as well as certain nonrecourse financing for real estate investments.


pages: 1,845 words: 567,850

J.K. Lasser's Your Income Tax 2014 by J. K. Lasser

Affordable Care Act / Obamacare, airline deregulation, asset allocation, business cycle, collective bargaining, distributed generation, employer provided health coverage, estate planning, Home mortgage interest deduction, intangible asset, medical malpractice, medical residency, mortgage debt, mortgage tax deduction, obamacare, passive income, Ponzi scheme, profit motive, rent control, Right to Buy, telemarketer, transaction costs, urban renewal, zero-coupon bond

Hillman’s plight is lamentable, but as the Fourth Circuit ruled, relief can only come from Congress if the IRS does not liberalize its regulation on self-charged expenses. 10.9 Passive Income Recharacterized as Nonpassive Income There is an advantage in treating income as passive income when you have passive losses that may offset the income. However, the law may prevent you from treating certain income as passive income. The conversion of passive income to nonpassive income is technically called “recharacterization.” This may occur when you do not materially participate in the business activity, but are sufficiently active for the IRS to consider your participation as significant. Recharacterization may also occur when you rent property to a business in which you materially participate, rent nondepreciable property, or sell development rental property. - - - - - - - - - - Caution “Recharacterization” of Passive Income Gain on the sale of property used in a passive activity may be recharacterized as nonpassive income if the property was formerly used in a nonpassive activity (10.16)

She does not materially participate in any of the activities during the year but participates in Activity A for 105 hours, in Activity B for 160 hours, and in Activity C for 125 hours. Her net passive income or loss from the three activities is: Carol’s passive activity gross income from significant participation passive activities of $2,200 exceeds passive activity deductions of $1,500. A ratable portion of her gross income from significant participation activities with net passive income for the tax year (Activities A and C) is treated as gross income that is not from a passive activity. The ratable portion is figured by dividing: 1. The excess of her passive activity gross income from significant participation over passive activity deductions from such activities (here $700) by 2. The net passive income of only the significant participation passive activities having net passive income (here $1,000). The ratable portion is 70%. Thus, $280 of gross income from Activity A ($400 × 70%) and $420 of gross income from Activity C ($600 × 70%) is treated as nonpassive gross income.

Such losses are deductible only from income from other passive activities. Losses disallowed by the passive activity rules are suspended and carried forward to later taxable years and become deductible only when passive income is realized or substantially all of the activity is sold. Casualty and theft losses are not passive losses unless they are of the type usually occurring in a business, such as shoplifting theft losses. On your tax return, passive income items and allowable deductible items are reported as regular income and deductions. For example, rental income and allowable deductions are reported on Schedule E. However, before you make these entries, you may have to prepare, which identifies your passive income and losses and helps you to determine whether passive loss items are deductible. At-risk rules generally limit losses for an activity to your cash investment and loans for which you are personally liable, as well as certain nonrecourse financing for real estate investments.


J.K. Lasser's Your Income Tax 2016: For Preparing Your 2015 Tax Return by J. K. Lasser Institute

Affordable Care Act / Obamacare, airline deregulation, asset allocation, business cycle, collective bargaining, distributed generation, employer provided health coverage, estate planning, Home mortgage interest deduction, intangible asset, medical malpractice, medical residency, mortgage debt, mortgage tax deduction, passive income, Ponzi scheme, profit motive, rent control, Right to Buy, transaction costs, urban renewal, zero-coupon bond

Hillman’s plight is lamentable, but as the Fourth Circuit ruled, relief can only come from Congress if the IRS does not liberalize its regulation on self-charged expenses. 10.9 Passive Income Recharacterized as Nonpassive Income There is an advantage in treating income as passive income when you have passive losses that may offset the income. However, the law may prevent you from treating certain income as passive income. The conversion of passive income to nonpassive income is technically called “recharacterization.” This may occur when you do not materially participate in the business activity, but are sufficiently active for the IRS to consider your participation as significant. Recharacterization may also occur when you rent property to a business in which you materially participate, rent nondepreciable property, or sell development rental property. Caution “Recharacterization” of Passive Income Gain on the sale of property used in a passive activity may be recharacterized as nonpassive income if the property was formerly used in a nonpassive activity (10.16).

Losses disallowed by the passive activity rules are suspended and carried forward to later taxable years and become deductible only when passive income is realized or substantially all of the activity is sold. Casualty and theft losses are not passive losses unless they are of the type usually occurring in a business, such as shoplifting theft losses. On your tax return, passive income items and allowable deductible items are reported as regular income and deductions. For example, rental income and allowable deductions are reported on Schedule E. However, before you make these entries, you may have to prepare Form 8582, which identifies your passive income and losses and helps you to determine whether passive loss items are deductible. At-risk rules generally limit losses for an activity to your cash investment and loans for which you are personally liable, as well as certain nonrecourse financing for real estate investments. see 10.17. 10.1 Rental Activities 10.2 Rental Real Estate Loss Allowance of up to $25,000 10.3 Real Estate Professionals 10.4 Participation May Avoid Passive Loss Restrictions 10.5 Classifying Business Activities as One or Several 10.6 Material Participation Tests for Business 10.7 Tax Credits of Passive Activities Limited 10.8 Determining Passive or Nonpassive Income and Loss 10.9 Passive Income Recharacterized as Nonpassive Income 10.10 Working Interests in Oil and Gas Wells 10.11 Partners and Members of LLCs and LLPs 10.12 Form 8582 10.13 Suspended Losses Allowed on Disposition of Your Interest 10.14 Suspended Tax Credits 10.15 Personal Service and Closely Held Corporations 10.16 Sales of Property and of Passive Activity Interests 10.17 At-Risk Limits 10.18 What Is At Risk?

On the other hand, if the business activity operates at a loss and you do not have passive income from other sources, you may want to meet the material participation test for that business activity in order to claim current loss deductions. IRS strategy in reviewing your activities would be the opposite. If your return were under audit, an agent would attempt to prevent you from treating income from a business activity as passive. For example, the IRS, by applying Tests 5 and 6, can prevent a retired person from treating post-retirement income from a prior business or profession as passive income that could offset passive losses from another activity. If you realize a loss in one passive activity, Test 4 may prevent you from generating passive income by merely reducing your participation in another activity. Material participation results in nonpassive treatment.


pages: 389 words: 81,596

Quit Like a Millionaire: No Gimmicks, Luck, or Trust Fund Required by Kristy Shen, Bryce Leung

"side hustle", Affordable Care Act / Obamacare, Airbnb, asset allocation, barriers to entry, buy low sell high, call centre, car-free, Columbine, cuban missile crisis, Deng Xiaoping, Elon Musk, fear of failure, financial independence, fixed income, follow your passion, hedonic treadmill, income inequality, index fund, longitudinal study, low cost airline, Mark Zuckerberg, mortgage debt, obamacare, offshore financial centre, passive income, Ponzi scheme, risk tolerance, risk/return, Silicon Valley, single-payer health, Snapchat, Steve Jobs, supply-chain management, the rule of 72, working poor, Y2K, Zipcar

Five thousand to $10,000 per year sounds like chump change if you’re trying to live on it, but if you have achieved SideFIRE and this is your supplemental income, it becomes significant. That’s $5,000 of passive income you don’t have to generate. According to the 4 Percent Rule, that means you can decrease the portfolio you need to escape from your job by a whopping $125,000. Think about how much time it would take for you to save that much money. This is why side hustles, by themselves, are not super useful for your financial freedom, but coupled with a portfolio spinning off passive income, they can make all the difference in the world. And if your side hustle has to do with your passion, it’s a triple win, because it decreases the size of the portfolio you need, lets you follow that passion, and generates additional income.

By developing a side hustle while you’re working, you essentially kill three birds with one stone: you increase your savings rate by making more money, develop a new skill, and reduce the size of the portfolio needed to escape your nine-to-five. Returning to the example of the couple earning a median family income of $62,175 per year before taxes, if they manage to earn $20,000 a year with a part-time job or side hustle after leaving their jobs, they would only need $40,000 − $20,000 = $20,000 per year in passive income from their portfolio. Using the 4 Percent Rule, that means they would only need $20,000 × 25 = $500,000 to achieve SideFIRE. If they save 24 percent of their after-tax income, here’s what the math looks like: Year Starting Balance Annual Contribution Return (6%) Total 1 $0.00 $12,724.00 $0.00 $12,724.00 2 $12,724.00 $12,724.00 $763.44 $26,211.44 3 $26,211.44 $12,724.00 $1,572.69 $40,508.13 4 $40,508.13 $12,724.00 $2,430.49 $55,662.62 5 $55,662.62 $12,724.00 $3,339.76 $71,726.38 6 $71,726.38 $12,724.00 $4,303.58 $88,753.96 7 $88,753.96 $12,724.00 $5,325.24 $106,803.20 8 $106,803.20 $12,724.00 $6,408.19 $125,935.39 9 $125,935.39 $12,724.00 $7,556.12 $146,215.51 10 $146,215.51 $12,724.00 $8,772.93 $167,712.44 11 $167,712.44 $12,724.00 $10,062.75 $190,499.19 12 $190,499.19 $12,724.00 $11,429.95 $214,653.14 13 $214,653.14 $12,724.00 $12,879.19 $240,256.33 14 $240,256.33 $12,724.00 $14,415.38 $267,395.71 15 $267,395.71 $12,724.00 $16,043.74 $296,163.45 16 $296,163.45 $12,724.00 $17,769.81 $326,657.26 17 $326,657.26 $12,724.00 $19,599.44 $358,980.70 18 $358,980.70 $12,724.00 $21,538.84 $393,243.54 19 $393,243.54 $12,724.00 $23,594.61 $429,562.15 20 $429,562.15 $12,724.00 $25,773.73 $468,059.88 21 $468,059.88 $12,724.00 $28,083.59 $508,867.47 By working on a side hustle to generate $20,000 a year, the couple can shave nine years off their time to financial independence.

Check out Grant Sabatier’s book Financial Freedom and Chris Guillebeau’s The $100 Startup for ideas on how to make money on side hustles. PARTIAL FI What if you’re not interested in a side hustle? What if you actually enjoy your job but just need more flexibility? What if you just want more time to spend time with family and friends? Say hello to Partial FI! When you are fully FI, the passive income from your portfolio must be enough to cover your expenses. But if you have the option to decrease your hours to part-time or become a contractor with the option to take mini-retirements or sabbaticals, Partial FI will allow you that flexibility and freedom. Some careers that require a certain number of hours to maintain your license, like nursing, are especially well suited to this path. Say you make the median family income.


pages: 169 words: 43,906

The Website Investor: The Guide to Buying an Online Website Business for Passive Income by Jeff Hunt

buy low sell high, Donald Trump, frictionless, frictionless market, intangible asset, medical malpractice, passive income, Ralph Waldo Emerson, Skype, software as a service

The Website Investor The Guide to Buying an Online Website Business for Passive Income Jeff Hunt NEW YORK The Website Investor The Guide to Buying an Online Website Business for Passive Income © 2015 Jeff Hunt. All rights reserved. No portion of this book may be reproduced, stored in a retrieval system, or transmitted in any form or by any means—electronic, mechanical, photocopy, recording, scanning, or other,—except for brief quotations in critical reviews or articles, without the prior written permission of the publisher. Published in New York, New York, by Morgan James Publishing. Morgan James and The Entrepreneurial Publisher are trademarks of Morgan James, LLC. www.MorganJamesPublishing.com The Morgan James Speakers Group can bring authors to your live event. For more information or to book an event visit The Morgan James Speakers Group at www.TheMorganJamesSpeakersGroup.com.

But also, like other kinds of business investments, if you are willing to put a little bit of effort in along with your money, you can make a little more. And, if you are willing to put in a lot of effort, you can make a lot of money. “Anyone who is not investing now is missing a tremendous opportunity.” —Carlos Slim Is Website Investing Truly Passive? As I said, one reason I love website investments is because there is the potential to have a passive income stream. There are some kinds of websites, like the healthcare website I mentioned, that are content websites. You put good information on the pages, and people visit to read the information. You make money when the visitors click on ads or when the advertisers pay you. Other websites require more activity on your part. For example, eCommerce websites require you to buy products and ship them when customers order from you.

Google might keep $0.50 and pass along $1 to the website owner. In the per-impression model, a company might pay $10 for every thousand times its ad is displayed on a website. Google might keep $4 of that and pass $6 along to the website owner. In effect, Google and other sophisticated ad networks have made it extremely easy for website owners to earn money from their content websites. Content websites produce very passive income streams, provided there is a steady stream of traffic. I own content websites that get a steady stream of visitors from articles I published long ago on sites that I have not updated in years. However, traffic is a fickle beast, and as many stories as there are about steady, long-term traffic, there are just as many about traffic that was there one day and dried up the next. More about traffic later, but for the purposes of our advertising discussion, be aware that if you are buying a website that earns its money from advertising, consistent traffic will either make or break your profitability.


pages: 135 words: 26,407

How to DeFi by Coingecko, Darren Lau, Sze Jin Teh, Kristian Kho, Erina Azmi, Tm Lee, Bobby Ong

algorithmic trading, asset allocation, Bernie Madoff, bitcoin, blockchain, buy and hold, capital controls, collapse of Lehman Brothers, cryptocurrency, distributed ledger, diversification, Ethereum, ethereum blockchain, fiat currency, Firefox, information retrieval, litecoin, margin call, new economy, passive income, payday loans, peer-to-peer, prediction markets, QR code, reserve currency, smart contracts, tulip mania, two-sided market

~ Recommended Readings The DeFi Series – An overview of the ecosystem and major protocols (Alethio) https://medium.com/alethio/the-defi-series-an-overview-of-the-ecosystem-and-major-protocols-da27d7b11191 Compound FAQ (Robert Leshner) https://medium.com/compound-finance/faq-1a2636713b69 DeFi Series #1 - Decentralized Cryptoasset Lending & Borrowing (Binance Research) https://research.binance.com/analysis/decentralized-finance-lending-borrowing Zero to DeFi – A beginner’s guide to earning passive income via Compound Finance (Defi Pulse) https://defipulse.com/blog/zero-to-defi-cdai/ I took out a loan with cryptocurrency and didn’t sign a thing (Stan Schroeder) https://mashable.com/article/defi-guide-ethereum-decentralized-finance.amp Earn passive income with Compound. (DefiZap) https://defitutorials.substack.com/p/earn-passive-income-with-compound Chapter Seven: Decentralized Exchanges (DEX) While Centralized Exchanges (CEXs) allow for large trades to happen with plenty of liquidity, it still carries a lot of risks because users do not have ownership of their assets in exchanges.

At first glance, dYdX appears to have some similarities to Compound - users can supply assets (lend) to earn interest and also loan assets (borrow) after depositing collateral. However, dYdX takes it one step further by incorporating a margin and leveraged exchange with ETH margin trading up to 5X leverage using either DAI or USDC. ~ Lending If you are a crypto holder who would like to generate some passive income on your otherwise unproductive cryptoassets, you may consider lending it out on dYdX for some yield. It is relatively low risk and by depositing it into dYdX, interest accrues every second without any additional maintenance or management needed. As a lender on dYdX, you only need to be mindful of the earned Interest Rate (APR) - this represents how much you will earn from lending out your assets


pages: 229 words: 61,482

The Gig Economy: The Complete Guide to Getting Better Work, Taking More Time Off, and Financing the Life You Want by Diane Mulcahy

Affordable Care Act / Obamacare, Airbnb, Amazon Mechanical Turk, basic income, Clayton Christensen, cognitive bias, collective bargaining, creative destruction, David Brooks, deliberate practice, diversification, diversified portfolio, fear of failure, financial independence, future of work, gig economy, helicopter parent, Home mortgage interest deduction, housing crisis, job satisfaction, Kickstarter, loss aversion, low skilled workers, Lyft, mass immigration, mental accounting, minimum wage unemployment, mortgage tax deduction, negative equity, passive income, Paul Graham, remote working, risk tolerance, Robert Shiller, Robert Shiller, Silicon Valley, Snapchat, TaskRabbit, Uber and Lyft, uber lyft, universal basic income, wage slave, Y Combinator, Zipcar

Analysis from the Urban-Brookings Tax Policy Center shows that 64 percent of Americans earn their income from a paycheck.2 It’s possible to achieve financial security and comfort through earned income, but it’s difficult to become wealthy because our earned income is limited by the finite hours of our labor we can sell. Passive income, or unearned income, comes from our investments—in real estate, the stock market, and businesses. It’s this investment income that most often creates wealth. The Urban-Brookings study found that the top 1 percent of Americans earn the majority (53 percent) of their income from passive sources rather than from a paycheck. It’s more volatile, and higher risk, than earned income but offers potentially higher reward. Passive income is produced by renting our homes or owning a piece of a business through direct ownership or through stock options or employee stock that many companies grant their employees. We can generate passive income from investing our retirement and savings account in the stock market. Looking for work at a company that offers equity compensation is another way to increase passive income, as is renting out any real estate you own or rent.

Looking for work at a company that offers equity compensation is another way to increase passive income, as is renting out any real estate you own or rent. As you consider options for making more money, consider ways you can earn more from your labor as well as generating passive income. Increase Financial Flexibility by Stashing the Cash Savings give us flexibility, create options in our life, and cushion the blow of unexpected financial setbacks like a job loss or unanticipated expense. With savings set aside, we can consider quitting that tedious job and then taking time to find the right next step. We can plan that memorable family vacation, stay home with our kids, go to our best friend’s destination wedding, and have the financial ability to make other decisions that matter to us.

life insurance Limited Liability Corporation (LLC) loss aversion Maker’s Schedule Manager’s Schedule marketing, for new jobs Marsh, Nigel Mastermind Dinners (Gaignard) material wealth, vs. personal fulfillment MBA students, planning by McDonald’s mental tasks, combining with physical Merchant, Nilofer MetLife, Study of the American Dream Microsoft middle class impact of home ownership middle managers Mihalic, Joe Mint.com Moment money, perspective on mortgage mortgage calculator National Labor Relations Act National Labor Relations Board (NLRB) negative cash flow net worth, in principal residence networks maintaining 99designs Obituary exercise offer in connecting 168 Hours (Vanderkam) opportunity, income security from opportunity mindset outbound connecting Outliers (Gladwell) overconfidence ownership, vs. access paid leave part-time side gigs passion, pursuing in time off passive income Peers.org pension plans personal branding personal burn rate personal fulfillment, vs. material wealth perspective, time off to change Pew Research Center physical tasks, combining with mental pilot tests planning for best-case scenario in financial flexibility for time off playtime portfolio of gigs building for experiments learning by doing opportunity for connections Postmates power, and expanding time predictors of future feelings priorities checkbook diagnostic exercise on extended family as of others, impact of private sector, job creation decline pro-bono legal adviser Proctor & Gamble Profiting from Uncertainty (Schoemaker) public assistance, eliminating public speaking purchases, time cost of Qapital QuickBooks quitting job, exit strategy for Rae, Amber rates of return, for housing Raw Deal (Hill) referrals, asking for regret, risk of Reich, Robert Reinventing You (Clark) rejuvenation, time off for relationships, impact on success renting growth in households vs. ownership reputation RescueTime resources, allocating to short-term activities vs. long-term goals resume, gaps for time off resume virtues retail workers retirement healthcare costs in new vision of plans to work longer before saving to finance traditional savings plans supplemental income in rewards, time for longer-term risk assessment of of boring life debt and of diploma debt facing fear by identifying size of risk reduction by acceptance by eliminating exercise for facing fear by assessing options with insurance by mitigating risk by shifting risk risk taker, learning to be Rohn, Jim Rolf, David Roth IRA Rowing the Atlantic (Savage) S Corporation S&P 500 companies, average life sabbaticals safety net, creating Sagmeister, Stefan Savage, Roz, Rowing the Atlantic saving for retirement traditional plan savings, financial plan and increase ScheduleOnce Schoemaker, Paul, Profiting from Uncertainty Schrager, Allison security creating from diversifying for income for job self-employment income tax form for risk assessment SEP IRA service workers Shared Security Account Shell, Richard Simmons, Gail skill-based economy, vs. credentials-based economy skill-based employment system, vs. tenure-based employment system skilled workers skills, income security from building Slaughter, Anne-Marie Snapchat social capital, of introducer social contagion social media Social Security Social Security Administration Society for Human Resources Management sole proprietor, independent worker as South by Southwest (SXSW) speaking inbound connecting through skills for specialization spending, auditing Stand Out (Clark) Star Plates start dates, negotiating startup exit strategy for Strayed, Cheryl Stride Health strong ties in network student loans success as contagious defining vision of external versions new American dream as definition refining vision of surrogation sweat equity bucket Target TaskRabbit tax data analysis Tax Policy Center taxes deductions for mortgage interest Schedule C withholding teaching technology for delegating outbound connecting by leveraging technology companies tenure-based employment system, vs. skill-based employment system time age-related difference in perception calculating use employees’ learned helplessness about expanding horizon for savings plan for longer-term rewards management mindfulness about and purchase cost reaction to wasting reclaiming tracking investments time frame, for goals time off benefits developing ideas for exercise financing friends and family reaction gaps in resume from between gigs, vs. paid time off planning for Toastmaster tolerance of risk Ton, Zeynep The Good Jobs Strategy Top Chef Topcoder total cost of home travel Twitter Uber drivers uncertainty, cognitive biases about unearned income unemployment insurance unemployment protection, for self-employed universal basic income (UBI) universality of benefits universities, faculty members Upwork Urban-Brookings Tax Policy Center vacation. see also time off Vanderkam, Laura, 168 Hours Vanguard, online calculator Virtues exercise volunteer positions during time off wage insurance Walmart Ware, Bronnie weak ties in network wealth gap WeWork withholding taxes Wolff, Edward work flexibility full-time job disappearance future of workers eliminating categorization of last resort workers’ compensation working lives, end of worst case, facing fear by starting with writing skills inbound connecting through Xero YouCanBook.me ABOUT THE AUTHOR Diane created and teaches The Gig Economy, which was named by Forbes as one of the Top 10 Most Innovative Business School Classes in the country.


pages: 237 words: 66,545

The Money Tree: A Story About Finding the Fortune in Your Own Backyard by Chris Guillebeau

"side hustle", Bernie Madoff, Ethereum, financial independence, global village, hiring and firing, housing crisis, passive income, race to the bottom, rent-seeking, ride hailing / ride sharing, Steve Jobs, telemarketer

There’s another very important reason why you need to go beyond reselling. Right now you don’t really have any sort of passive income.” Jake had never heard of retail arbitrage, the phrase that Preena had mentioned the other day, but he was familiar with the promise of passive income. The phrase had become a bit of a cliché. Once, while browsing at a bookstore, he’d spent an hour leafing through a whole shelf of books that promised such a thing. Most of them seemed to suggest that readers buy the author’s course on acquiring real estate properties. When he mentioned this, Clarence immediately became animated. “I’m glad you brought that up! Buying rental properties is one small field of passive income,” he said, “and it’s not realistic for most people. Here’s another test, and this one’s easier. Do you have enough money for a down payment on a bunch of old houses or apartments?”

Buying rental properties works for a small number of people—and good for them—but most folks should look elsewhere. I should put this on a bumper sticker. Passive income: it’s not just about real estate. “Here’s what’s far more obtainable. Imagine waking up to a notification that says there is more money in your bank account than there was when you went to sleep. Anything that gets you closer to that point is your goal.” That sounded good to Jake. What sounded even better, at least at the moment, was the idea of sneaking away somewhere to take a nap. He shook it off and forced himself to focus. If he could figure this out, he knew he’d be much better off. * * * — Clarence had almost finished his coffee. “Alright, we just have a few minutes left, so let’s cut to the chase. The shortest path to passive income is to offer some kind of service that people can pay for. Therefore, your new assignment is to create your first service.

Most of the time, he didn’t hire at all—he contracted for the services he needed, making certain he wouldn’t extend an offer he might not be able to fulfill. He didn’t rely on a single project for his income, and he spent as much time working on the underlying systems of the business as he did trying to generate sales. After ten years, he “retired,” moving back to California and no longer actively starting projects but continuing to earn passive income from the earlier ones. He started teaching the Third Way model, not in a flashy way and never trying to make a name for himself. He never wrote a book or went on the speaking circuit. He just began helping people. He paid for his housekeeper’s son to go to college, even though the woman came by only once a week and he hadn’t known her for long. He did as much for his former employees as possible, providing glowing references when they changed jobs and teaching some of them how to make money on their own.


pages: 231 words: 76,283

Work Optional: Retire Early the Non-Penny-Pinching Way by Tanja Hester

"side hustle", Affordable Care Act / Obamacare, Airbnb, anti-work, asset allocation, barriers to entry, buy and hold, crowdsourcing, diversification, estate planning, financial independence, full employment, gig economy, hedonic treadmill, high net worth, index fund, labor-force participation, longitudinal study, medical bankruptcy, mortgage debt, obamacare, passive income, post-work, remote working, rent control, ride hailing / ride sharing, risk tolerance, stocks for the long run, Vanguard fund

But it’s also entirely possible to focus on shifting from earned income to the confusingly named unearned income, which really just means money you receive without having done any labor. This is made possible in part through the wonder that is compound interest. You may also hear this money called passive income, but I prefer to call it magic money. There’s no actual magic involved, of course, but when you watch money you’ve invested grow and multiply over time, without you doing a thing, it sure feels like magic. The “magic” is really just the compounding of interest, capital gains, and asset appreciation earned on money you’ve invested, meaning that what you earn each year is multiplied on top of prior years’ growth, not just added, making the growth happen much faster. If you can invest enough, eventually you have enough magic money or passive income spinning off of your invested assets that it covers all of your living costs, meaning you don’t need to work anymore, or you can work much less.

Of course, if a high-deductible plan with an HSA is the only thing your employer offers, by all means take it. And then use the HSA to your advantage if you can—and don’t neglect your preventive care. Rental Real Estate Investing in rental real estate—whether that’s condos, apartment buildings, or single-family homes—can be one of the fastest routes to a work-optional life because you need far less cash saved to generate enough magic money or passive income to live off of. The flip side, of course, is that that’s made possible by leverage, a fancy word for debt. Most real estate investors take out a mortgage on a property they wish to buy to rent it out. They do the math on the purchase price and local rental market to ensure that the rent they collect will cover the mortgage payments, taxes, insurance, income tax they’ll owe, and upkeep costs and still net some magic money at the end, what’s often called positive cash flow.

And even though you’ll have earnings in retirement from your magic money sources, most of that does not count as earned income, and thus does not earn you Social Security credits. Unearned income that doesn’t increase your Social Security benefits includes capital gains, rental income, interest on savings, IRA or 401(k) withdrawals, private pensions, payouts for vacation or sick leave, bonuses, and deferred compensation. In other words, just about every possible passive income source. Though it’s possible that Social Security benefits could decrease, especially for higher earners, to keep the system solvent longer, it’s helpful to know the ballpark ranges you might be looking at. While there is no minimum benefit, and those who have paid very little into the system will receive very little in return, the average monthly benefit for someone who reached full retirement age in 2016 was $1,340, while the maximum benefit for the highest earners was $2,640, a total of less than $32,000 per year before taxes.


pages: 206 words: 60,587

Side Hustle: From Idea to Income in 27 Days by Chris Guillebeau

"side hustle", Airbnb, buy low sell high, inventory management, Lyft, passive income, ride hailing / ride sharing, sharing economy, side project, Silicon Valley, Silicon Valley startup, subscription business, TaskRabbit, the scientific method, Uber for X, uber lyft

She was her own ideal customer and therefore understood that person’s needs better than anyone. Once she came to this realization, she began to focus her time on courses and products geared toward people just like her. By the end of the first year of her hustle, she earned more than $20,000. By midpoint of year two, she had already crossed $30,000, all while reducing the actual design work she did in order to focus on more passive income. She was still working her day job but found her side hustle so fulfilling that her life suddenly didn’t look as beige anymore. START WITH ONE Every side hustle has a target customer, a specific type of person that its product or service is designed for. Sometimes these target customers are called “avatars,” but you can also just think of them as your people. And the better you can understand those people—who they are, what they need, and where their pain points are—the better equipped you’ll be to serve them.

If you’ve reached maximum output, simply go back to the list of ideas you put together when we started, or come up with a new idea entirely. Now that you’re an experienced side hustler, you probably have no shortage of ideas and should have no trouble getting one of them off the ground. With his unconventional résumé service turned product, Tim had effectively built a treehouse in his backyard—the project had fulfilled its goal and was now working hard to earn passive income for him. He could have kept working on it in hopes of growing it further, but instead he looked to the future and decided to pursue one of his many other ideas. That’s the great thing about side hustles: once you get started making money, it’s hard to stop! * * * *1 In the long term, it’s good to know your approximate “hourly wage” for what you earn on your hustle. But you may want to separate startup time from operation time, since startup time is highly variable

Once it’s complete, your blueprint has the potential to become a long-term asset, earning money for as long as the topic is relevant and as long as people are willing to pay to learn about it. BUSINESS MODEL: Create a step-by-step guide that shows customers exactly how to do something. WHY: People want to learn, and they’ll pay for the right materials. AVERAGE STARTUP COST: Low. EASE OF STARTUP: Low. LONG-TERM POTENTIAL: Variable. SKILLS REQUIRED: Teaching, logical thinking, and marketing (once it’s written, you’ll need to get the word out!). BENEFITS: Potential for truly passive income. DOWNSIDES: Potential consumer resistance; may be hard to compete against free resources. WORKFLOW: 1. Identify a topic for your blueprint. The more specific, the better. 2. Write down the major challenges that others experience when trying to tackle this topic on their own. 3. Write down each step that people need to complete to follow the blueprint to success. 4. Get feedback on the blueprint by showing it to someone who’s interested in the topic.


Trade Your Way to Financial Freedom by van K. Tharp

asset allocation, backtesting, Bretton Woods, buy and hold, capital asset pricing model, commodity trading advisor, compound rate of return, computer age, distributed generation, diversification, dogs of the Dow, Elliott wave, high net worth, index fund, locking in a profit, margin call, market fundamentalism, passive income, prediction markets, price stability, random walk, reserve currency, risk tolerance, Ronald Reagan, Sharpe ratio, short selling, transaction costs

My solution to this is to adopt new rules. Financial freedom occurs when your passive income (income that comes in when your money works for you) is greater than your monthly expenses. Thus, if you need $5,000 per month to live on, you become financially free when your passive income is greater than $5,000 per month. It’s that easy, and anyone with enough desire and commitment can do it. I’ve described the procedures in detail in my third book, Safe Strategies for Financial Freedom.9 In this book, I want to focus more on trading as a method of developing passive income. If you can generate enough income through trading or investing to meet your monthly expenses, and if the process requires only a few hours of your time each day, then I’m willing to call that income “passive income.” And through this process you can be financially free.10 Although you may have to spend several years learning the business of trading and developing a business plan and systems that fit your plan, once that is complete, you could be financially free by my definition.

Tharp, The Definitive Guide to Expectancy and Position Sizing (Cary, N.C.: International Institute of Trading Mastery). Call 919-466-0043 for details, or go to www.iitm.com. 9. Van K. Tharp, Safe Strategies for Financial Freedom (New York: McGraw-Hill, 2004). 10. This must be a consistent return for you to count it as passive income. For example, if you are up 30 percent one month, 20 percent the next, down 25 percent the next, down 15 percent the next, and up 60 percent the next, I’d be reluctant to count any of it as passive income because it is not consistent and you cannot rely upon it. CHAPTER 2 Judgmental Biases: Why Mastering the Markets Is So Difficult for Most People We typically trade our beliefs about the market, and once we’ve made up our minds about those beliefs, we’re not likely to change them. And when we play the markets, we assume that we are considering all of the available information.

The average person knows little to nothing about either of these topics, and you certainly will not hear the media discussing them. They might discuss the psychology of the market, but not your personal psychology. Furthermore, they might discuss asset allocation, but few people understand that the real advantage of asset allocation is the fact that it tells you “how much” to invest in each asset, including cash. • An easy way to play the money game is to have passive income that is greater than your expenses. This is what I call financial freedom, and the average person with a plan can achieve financial freedom in five to seven years. However, most people think they win by having a lot of the latest toys, and if the down payments and monthly payments are low enough, they can have those toys now. This idea basically produces financial slavery, and it is why U.S. consumers now have a negative savings rate.


Playing With FIRE (Financial Independence Retire Early): How Far Would You Go for Financial Freedom? by Scott Rieckens, Mr. Money Mustache

Airbnb, cryptocurrency, effective altruism, financial independence, index fund, job satisfaction, McMansion, passive income, remote working, Vanguard fund

Then, at age thirty-three, I was introduced to a fascinating phenomenon known as FIRE, which stands for “financial independence retire early.” FIRE is a growing community of people of all types and income levels committed to lives of aggressive savings and low-cost investments in order to take control of their finances and buy back their most precious resource, time. The end goal is to achieve “FIRE,” the state of having INTRODUCTION TO FIRE enough passive income that you don’t need to work to pay your living expenses. Many people who reach FIRE keep working out of their passion for their fields, but plenty of others quit to travel the world, start nonprofits, pursue creative projects, or just live simply. In fact, despite the term “retire early” in the movement’s name, I’ve found the people in the FIRE community often reject the word retire and its implications; financial independence is about having the freedom and flexibility to pursue your true calling, whether or not it makes any money.

Pete explained that all he’d done was live like he was in college even after he was making a good salary as an engineer. Over the years, he had saved a total of between twenty-five and twenty-eight times his annual spending and invested that money in Vanguard index funds (which wouldn’t be the last time I’d hear that recommendation!). Then, at thirty years old, Pete and his wife quit their cubicle jobs when their baby boy was born, since their investments were now creating enough passive income to recover their living expenses. He went on to say that this same basic formula works for most people. So 19 PLAYING WITH FIRE 20 all Taylor and I needed to do to retire was save twenty-five times our annual expenses? At the time, we were spending around $10,000 a month, which totaled about $120,000 a year, so that meant we needed to save a total of $3 million. That was all? Hadn’t someone once calculated you needed to save, like, $10 million to retire?!

We knew our path to FI had to include all those things, so along the way, we took four mini-retirements, ranging from one month up to a year, traveled to twenty-seven countries, lived abroad, adopted four kids, and had two biological kids. PLAYING WITH FIRE In a Nutshell 46 ✓ It took us thirteen years to reach FI with an average annual income of $60,000. ✓ We took four mini-retirements along the way to travel, adopt our children, and build passive income with rentals. ✓ We live off Adam’s army pension, our rental income, and our investments. ✓ Early retirement has given us the resources and ability to adopt four foster kids. ✓ We paid cash for a $50,000 fixer house and did most of the renovating ourselves. The Hardest Part Retiring in our thirties has put a strain on some of our friendships. A lot of people get really confused about it, especially since we were never particularly high earners.


pages: 139 words: 33,246

Money Moments: Simple Steps to Financial Well-Being by Jason Butler

Albert Einstein, asset allocation, buy and hold, Cass Sunstein, diversified portfolio, estate planning, financial independence, fixed income, happiness index / gross national happiness, index fund, intangible asset, longitudinal study, loss aversion, Lyft, Mark Zuckerberg, mortgage debt, passive income, placebo effect, Richard Thaler, ride hailing / ride sharing, Steve Jobs, time value of money, traffic fines, Travis Kalanick, Uber and Lyft, uber lyft, Vanguard fund, Yogi Berra

The old rule of thumb I was taught was to have at least six months’ worth of expenditure in a cash reserve, adjusted up or down depending on the situation and preferences. For example, if you are wholly reliant on your income from working, and your employer doesn’t offer more than basic state disability benefits, you’d probably want to hold nearer to six months’ expenses. However, if you have passive income (dividends, rental, royalties etc.) and a partner who also works, then you might feel fine holding just two or three months’ worth of expenses. But there is now a more robust and effective way to calculate and work towards building an adequate emergency cash reserve. HelloWallet is an independent, online and mobile financial wellness software application provided by US companies that employ over 2.5 million workers.

By analysing the anonymous banking transactions of users, HelloWallet has developed a methodology for determining a more personalised emergency savings target for most workers.26 Emergency expenses are categorised as either minor, major or job loss related as shown in table 1. TABLE 1: TYPES OF EMERGENCY RECOMMENDATIONS AND HOW HELLOWALLET CALCULATE THEM TYPE OF EMERGENCY Minor emergency Minor Car Repair + Minor Home Repair + Healthcare Deductible Major emergency Maximum of: Major Car Repair; Major Home Repair; Out-of-pocket Healthcare Costs Job loss 1 Year of Expenses – Secondary Income for Year – Unemployment Benefits/passive income Source: HelloWallet Minor expenses are the most common but tend to be fleeting and have less impact and the researchers recommend people start saving for these expenses to build confidence and self-discipline The average suggested amounts, based on US data, are shown in table 2. TABLE 2: EXAMPLE OF MINOR EMERGENCY FUND RECOMMENDATION CALCULATION Source: HelloWallet Major expenses are less common but can have a big impact on family finances.


How to Form Your Own California Corporation by Anthony Mancuso

business cycle, corporate governance, corporate raider, distributed generation, estate planning, information retrieval, intangible asset, passive income, passive investing, Silicon Valley

It’s usually easy to avoid by having a tax adviser tell you how to use a corporate services contract that won’t be classified as a personal services contract, and because most small corporations do not have significant passive income. Also, the PHC rules state that rental income and software royalties—two of the categories of passive income most likely to be earned by small corpor­ations—won’t be counted to determine if a corpor­ation is a PHC. Even if the IRS finds that a corporation is a PHC and assesses the surtax, the corporation can usually avoid the tax by making dividend payments (direct payments out of current earnings) and profits to shareholders. In other words, you can pay your profits to your shareholders, not to the IRS in the form of a PHC tax. The PHC rules are too complicated to fully explain. If your corporation has five or fewer shareholders and performs services or earns passive income, check with a tax advisor to make sure you avoid the PHC surtax.


pages: 197 words: 60,477

So Good They Can't Ignore You: Why Skills Trump Passion in the Quest for Work You Love by Cal Newport

Apple II, bounce rate, business cycle, Byte Shop, Cal Newport, capital controls, cleantech, Community Supported Agriculture, deliberate practice, financial independence, follow your passion, Frank Gehry, information asymmetry, job satisfaction, job-hopping, knowledge worker, Mason jar, medical residency, new economy, passive income, Paul Terrell, popular electronics, renewable energy credits, Results Only Work Environment, Richard Bolles, Richard Feynman, rolodex, Sand Hill Road, side project, Silicon Valley, Skype, Steve Jobs, Steve Wozniak, web application, winner-take-all economy

Remember Jane from earlier in Rule #3: She dropped out of college with the vague idea that some sort of online business would support a lifestyle of adventure. If she had met Derek Sivers, she would have delayed this move until she had real evidence that she could make money online. In this case, the law would have served its purpose well, as a simple experiment would have likely revealed that passive-income websites are more myth than reality, and thus prevented her rash abandonment of her education. This doesn’t mean that Jane would have had to resign herself to a life of boring work. On the contrary, the law could have provided her structure to keep exploring variations on her adventurous life vision until she could find one to pursue that would actually yield results. Summary of Rule #3 Rules #1 and #2 laid the foundation for my new thinking on how people end up loving what they do.

During my quest, for example, I discovered two traps that typically trip people up in their search for control. The first trap was having too little career capital. If you go after more control in your working life without a rare and valuable skill to offer in return, you’re likely pursuing a mirage. This was the trap tripped, for example, by the many fans of lifestyle design, who left their traditional jobs to try to make a living on passive income-generating websites. Many of these contrarians quickly discovered that the income-generating piece of that plan doesn’t work well if you don’t have something valuable to offer in exchange for people’s money. This trap might not seem relevant to my job hunt, as the academic-search process usually demands large stores of career capital—in the form of peer-reviewed publications and strong recommendation letters—before a candidate has a possibility of earning an offer.


Early Retirement Guide: 40 is the new 65 by Manish Thakur

"side hustle", Airbnb, diversified portfolio, financial independence, hedonic treadmill, index fund, Lyft, passive income, passive investing, risk tolerance, Robert Shiller, Robert Shiller, time value of money, uber lyft, Vanguard fund, Zipcar

A different way to handle the risk of a bad economy is to have more saved up in your investment egg than the 25x suggested amount that most people go with. It's still good to adjust your withdrawal rate a little but it won't have to be a significantly smaller nest egg. The third option to fight this risk is to diversify your income streams. Instead of just investing in stocks and bonds, you could also own a rental property, create passive income streams, and develop skills that you can use to quickly use to make money in a pinch, such as developing websites for small businesses. What if I lose my job and can't find work? The good news is that being unemployed isn't as bad as people make it out to be. It's a rare opportunity to reflect, search for a job that better fits our goals, and of course spend more time with our loved ones.


pages: 156 words: 15,746

Personal Finance with Python by Max Humber

asset allocation, backtesting, bitcoin, cryptocurrency, en.wikipedia.org, Ethereum, passive income, web application

Importantly, if your investment has an expected IRR of 5 percent but your cost of borrowing is 8 percent, you should not invest in the opportunity or venture. But when the numbers are reversed—that is to say that the IRR exceeds the cost of borrowing—you should invest! =IRR() At this point in our imaginary example we’re in for $3,000. But instead of doubling our money, let’s bring things ever so slightly back to Earth and pretend that our Dogecoin rig generates $1,000 in passive income each year over the next four years. date income expenses 0 2017-01-01 0 -3000 1 2018-01-01 1000 0 2 2019-01-01 1000 0 3 2020-01-01 1000 0 4 2021-01-01 1000 0 To calculate the IRR for this example, we can fire up Excel, total up the inflows and outflows, and use the built-in =IRR() formula to get what we need. date income expenses total 0 2017-01-01 0 -3000 -3000 1 2018-01-01 1000 0 1000 2 2019-01-01 1000 0 1000 3 2020-01-01 1000 0 1000 4 2021-01-01 1000 0 1000 If total is in Excel column D, then applying the formula =IRR(D0:D4) will get us something close to 13 percent.


pages: 282 words: 81,873

Live Work Work Work Die: A Journey Into the Savage Heart of Silicon Valley by Corey Pein

23andMe, 4chan, affirmative action, Affordable Care Act / Obamacare, Airbnb, Amazon Mechanical Turk, Anne Wojcicki, artificial general intelligence, bank run, barriers to entry, Benevolent Dictator For Life (BDFL), Bernie Sanders, bitcoin, Build a better mousetrap, California gold rush, cashless society, colonial rule, computer age, cryptocurrency, data is the new oil, disruptive innovation, Donald Trump, Douglas Hofstadter, Elon Musk, Extropian, gig economy, Google bus, Google Glasses, Google X / Alphabet X, hacker house, hive mind, illegal immigration, immigration reform, Internet of things, invisible hand, Isaac Newton, Jeff Bezos, job automation, Kevin Kelly, Khan Academy, Law of Accelerating Returns, Lean Startup, life extension, Lyft, Mahatma Gandhi, Marc Andreessen, Mark Zuckerberg, Menlo Park, minimum viable product, move fast and break things, move fast and break things, mutually assured destruction, obamacare, passive income, patent troll, Paul Graham, peer-to-peer lending, Peter H. Diamandis: Planetary Resources, Peter Thiel, platform as a service, plutocrats, Plutocrats, Ponzi scheme, post-work, Ray Kurzweil, regulatory arbitrage, rent control, RFID, Robert Mercer, rolodex, Ronald Reagan, Ross Ulbricht, Ruby on Rails, Sam Altman, Sand Hill Road, Scientific racism, self-driving car, sharing economy, side project, Silicon Valley, Silicon Valley startup, Singularitarianism, Skype, Snapchat, social software, software as a service, source of truth, South of Market, San Francisco, Startup school, stealth mode startup, Steve Jobs, Steve Wozniak, TaskRabbit, technological singularity, technoutopianism, telepresence, too big to fail, Travis Kalanick, tulip mania, Uber for X, uber lyft, ubercab, upwardly mobile, Vernor Vinge, X Prize, Y Combinator

Many buyers were full-time Fiverrers in places like the Philippines or India, where $5 went a lot farther, he said. The book also marked a transition for Corey, as he spent less time doing the labor-intensive Web design and more time searching for the cold fusion of internet marketing: “passive income.” This was shorthand for a variety of techniques whereby one could generate wealth while sitting around doing nothing. Some were proven yet not easily attainable, such as living off the compound interest from one’s investments and savings. Others—unlike Corey’s methods—were elaborate, unworkable, or illegal, such as pyramid schemes and spambot-powered credit card fraud. Compared to more reliable methods of generating passive income, like inheriting a trust fund, these scams had a relatively low barrier to entry. Either way, the appeal was self-evident. “It comes to a point where trading your time for money—it’s limiting, you know?”


Crushing It! EPB by Gary Vaynerchuk

"side hustle", augmented reality, fear of failure, follow your passion, Mark Zuckerberg, passive income, ride hailing / ride sharing, rolodex, Rubik’s Cube, Saturday Night Live, Silicon Valley, Skype, Snapchat

I know that there are so many, because they follow me, and I follow them and see their work. If I can bring awareness to them and get more of the brands that I work with to have a better representation of the entire sewing community, not just a part of the community, then I’ve done my job. 5 The Only Thing You Need to Give Yourself to Crush It PERMISSION www.garyvaynerchuk.com/permission How I’m Crushing It Pat Flynn, Smart Passive Income IG: @patflynn Pat Flynn had planned to be an architect since the days when he was a straight-A high school student. After graduating magna cum laude from UC-Berkeley, he quickly landed a job with a renowned architectural firm in the Bay Area, where he became one of the youngest people ever to become job captain. His future bright, his 401k growing, he proposed to his girlfriend, who said yes.

Right around this time, Pat’s earnings show a striking upward inflection point. “I’m not saying that Crush It! was the sole reason why I was able to grow my income to what it is now, but I went bigger, that’s for sure. I started to produce more things instead of being just a blogger. I started to look for other ways to expand beyond my realm of comfort.” And expand he did. He started a YouTube channel in 2009. In 2010, he launched the Smart Passive Income podcast, which has seen more than forty million downloads. In 2011, he started accepting offers to speak. To provide a space to answer the deluge of questions he gets from his followers, he then created a daily Ask Pat podcast, as well as a few others to address niche subjects. His self-published book was a Wall Street Journal best seller. All along, he followed through on his commitment of being a “crash test dummy” for online business development.


pages: 346 words: 102,625

Early Retirement Extreme by Jacob Lund Fisker

8-hour work day, active transport: walking or cycling, barriers to entry, buy and hold, clean water, Community Supported Agriculture, delayed gratification, discounted cash flows, diversification, dogs of the Dow, don't be evil, dumpster diving, financial independence, game design, index fund, invention of the steam engine, inventory management, lateral thinking, loose coupling, market bubble, McMansion, passive income, peak oil, place-making, Ponzi scheme, psychological pricing, the scientific method, time value of money, transaction costs, wage slave, working poor

In addition, financial skills are important. In particular, they become increasingly important for anyone who accumulates more and more assets. It's strange how specialists gladly spend a great deal of time perfecting their skills to pursue a five percent raise, while at the same time there is a fatalistic tendency to accept whatever investment strategies are currently fashionable on Wall Street when it comes to generating passive income.30 When investments become fashionable (a result of emergent behavior of a system), by definition they no longer offer good returns, even though they have historically when only used by a few people. Handing over responsibility for one's savings does not make sense, especially for anyone whose investment income is comparable to one's expenses or worse, one's job income.31 Such a person is not just an employee, but an asset manager as well.

It would thus be possible to literally run small errands, like picking up small items from the supermarket, and anyone who does this on a regular basis is bound to end up with sustained low-intensity endurance and a resting pulse lower than 50 beats per minute. If you managed to arrange your residence to be less than three miles from anything, you wouldn't even need a bicycle. In that case, I would walk to work, which would take 60 minutes that could be used for meditation, brainstorming or calculating your passive income from your savings in as many ways as you can think of, and then run home, which would take about 20 minutes. When shopping, I'd run with an empty backpack and then walk a full backpack home. It is a more minimalist approach than the bicycle option. Cycling Statistically, cycling is about as dangerous as driving a standard-sized car--SUVs are a little bit more dangerous because of rollovers and the increased difficulty of swerving out of the way in a bigger vehicle.97 However, many bike riders are killed because they ride in the wrong direction or on the sidewalk.


pages: 572 words: 94,002

Reset: How to Restart Your Life and Get F.U. Money: The Unconventional Early Retirement Plan for Midlife Careerists Who Want to Be Happy by David Sawyer

Airbnb, Albert Einstein, asset allocation, beat the dealer, bitcoin, Cal Newport, cloud computing, cognitive dissonance, crowdsourcing, cryptocurrency, David Attenborough, David Heinemeier Hansson, Desert Island Discs, diversification, diversified portfolio, Edward Thorp, Elon Musk, financial independence, follow your passion, gig economy, hiring and firing, index card, index fund, invention of the wheel, knowledge worker, loadsamoney, low skilled workers, Mahatma Gandhi, Mark Zuckerberg, meta analysis, meta-analysis, mortgage debt, passive income, passive investing, Paul Samuelson, pension reform, risk tolerance, Robert Shiller, Robert Shiller, Ronald Reagan, Silicon Valley, Skype, smart meter, Snapchat, stakhanovite, Steve Jobs, Tim Cook: Apple, Vanguard fund, Y Combinator

Nevertheless, there’s always a longing, deep inside, that one day, we’ll get our just deserts, be heralded as the geniuses we know ourselves to be. Take succour from Gary Vaynerchuk’s observation that: “you’re always one great piece of content away from changing your life. Everyone you know started off as an unknown until they did the thing that made them known[149].” If you do prove interesting, and people dig your worldview, consider making money from it[150]. It’s hardly passive income (blogging is hard work), but money earned from limited display adverts or affiliate marketing on your blog is not to be sneered at. Trust me, financial independence bloggers are funding their early retirement, without touching their capital, by following this route[151]. Last, try different tactics. If you’re serious about going viral, write 30 blog posts, your best work, then release them every two days for two months.

JL Collins Part IV of RESET comprises a plan that will transform your relationship with money and help you retire years earlier. It’ll also explain the theory that underpins said plan. Let’s start with 12 essential disciplines for those who want to achieve financial independence: It’s your net worth that matters, not your salary. Know the difference between assets and liabilities. Build your assets[248]. Minimise your taxes. Make money while you sleep by maximising your passive income. Avoid debt, apart from your mortgage. Understand consumerism. Learn the difference between needs and wants. Wants are insatiable. Take care of every pound. Keep expenses low and save as much as you can every month. In your career, seek knowledge. Take jobs for what you can learn, not what they pay. Work hard to fulfil your earning potential: don’t buy more to reflect your increased earnings, save them and invest.


pages: 484 words: 104,873

Rise of the Robots: Technology and the Threat of a Jobless Future by Martin Ford

"Robert Solow", 3D printing, additive manufacturing, Affordable Care Act / Obamacare, AI winter, algorithmic trading, Amazon Mechanical Turk, artificial general intelligence, assortative mating, autonomous vehicles, banking crisis, basic income, Baxter: Rethink Robotics, Bernie Madoff, Bill Joy: nanobots, business cycle, call centre, Capital in the Twenty-First Century by Thomas Piketty, Chris Urmson, Clayton Christensen, clean water, cloud computing, collateralized debt obligation, commoditize, computer age, creative destruction, debt deflation, deskilling, disruptive innovation, diversified portfolio, Erik Brynjolfsson, factory automation, financial innovation, Flash crash, Fractional reserve banking, Freestyle chess, full employment, Goldman Sachs: Vampire Squid, Gunnar Myrdal, High speed trading, income inequality, indoor plumbing, industrial robot, informal economy, iterative process, Jaron Lanier, job automation, John Markoff, John Maynard Keynes: technological unemployment, John von Neumann, Kenneth Arrow, Khan Academy, knowledge worker, labor-force participation, liquidity trap, low skilled workers, low-wage service sector, Lyft, manufacturing employment, Marc Andreessen, McJob, moral hazard, Narrative Science, Network effects, new economy, Nicholas Carr, Norbert Wiener, obamacare, optical character recognition, passive income, Paul Samuelson, performance metric, Peter Thiel, plutocrats, Plutocrats, post scarcity, precision agriculture, price mechanism, Ray Kurzweil, rent control, rent-seeking, reshoring, RFID, Richard Feynman, Rodney Brooks, Sam Peltzman, secular stagnation, self-driving car, Silicon Valley, Silicon Valley startup, single-payer health, software is eating the world, sovereign wealth fund, speech recognition, Spread Networks laid a new fibre optics cable between New York and Chicago, stealth mode startup, stem cell, Stephen Hawking, Steve Jobs, Steven Levy, Steven Pinker, strong AI, Stuxnet, technological singularity, telepresence, telepresence robot, The Bell Curve by Richard Herrnstein and Charles Murray, The Coming Technological Singularity, The Future of Employment, Thomas L Friedman, too big to fail, Tyler Cowen: Great Stagnation, uber lyft, union organizing, Vernor Vinge, very high income, Watson beat the top human players on Jeopardy!, women in the workforce

As a result, virtually no one who gets into the program ever works again. Clearly, if a guaranteed income is means-tested, then this should happen at a relatively high level, preferably well into middle-class territory. A person who decides to forego other earning opportunities then faces a long fall. Another good idea would be to discriminate between active and passive income. A guaranteed income might be means-tested aggressively against passive income such as a pension, investment income, or Social Security. Active income like wages from a job, self-employment income, or earnings from a small business either would not be means-tested at all or would occur at a much higher level. This should ensure a consistent incentive for everyone to work as hard as possible, given the opportunities available. A guaranteed income scheme would also be likely to create a number of more subtle incentives for both individuals and families.


pages: 170 words: 46,126

The 1% Rule: How to Fall in Love With the Process and Achieve Your Wildest Dreams by Tommy Baker

"side hustle", Cal Newport, delayed gratification, deliberate practice, Elon Musk, knowledge worker, Parkinson's law, passive income, Steve Jobs

YOU WON’T FIND YOUR SOUL MATE ON TINDER You won’t find your soulmate on Tinder. You won’t create a 6-figure funnel after reading Expert Secrets. You won’t be spiritually on fire after three meditation sessions. You won’t have a six pack after hiking your local mountain once. Hate to break it to you, but this is real life. I can’t tell you how many times someone has told me about their latest venture and how it’s guaranteed to bring in $20,000 a month in passive income. A few weeks later, I’ll go to the site they created and it no longer exists. Their expectations were a level 10, yet they didn’t have the courage to go through the ugly, intense, and sometimes excruciating process of creation. Sure, there are unicorns in life, but I’m not putting my life on the line for a mystical creature — even a cute one. We’re living in a world where we want the result without the process.


pages: 168 words: 50,647

The End of Jobs: Money, Meaning and Freedom Without the 9-To-5 by Taylor Pearson

"side hustle", Airbnb, barriers to entry, Ben Horowitz, Black Swan, call centre, cloud computing, commoditize, creative destruction, David Heinemeier Hansson, Elon Musk, en.wikipedia.org, Frederick Winslow Taylor, future of work, Google Hangouts, Kevin Kelly, Kickstarter, knowledge economy, knowledge worker, loss aversion, low skilled workers, Lyft, Marc Andreessen, Mark Zuckerberg, market fragmentation, means of production, Oculus Rift, passive income, passive investing, Peter Thiel, remote working, Ronald Reagan: Tear down this wall, sharing economy, side project, Silicon Valley, Skype, software as a service, software is eating the world, Startup school, Steve Jobs, Steve Wozniak, Stewart Brand, telemarketer, Thomas Malthus, Uber and Lyft, uber lyft, unpaid internship, Watson beat the top human players on Jeopardy!, web application, Whole Earth Catalog

While there’s a tremendous amount to learn from individuals like Buffett and Munger, it’s worth considering their perspective. Compound interest on “float” (the money currently in their insurance businesses from paid premiums until claims are paid it out) is powerful for them because they are compounding billions of dollars. If you have $10 million and lend it out at a 5% interest rate then you’d be getting $41,666 in passive income every month. That’s without ever touching the principal $10 million sitting in the bank. Not bad. If you build a company and sell it for a few million dollars, then compound interest is powerful. While the math and logic behind the Fast Lane vs. Slow Lane has always been true, the internet and economic changes we’ve discussed have made the entrepreneurial path more accessible and the potential gains larger.


pages: 186 words: 49,251

The Automatic Customer: Creating a Subscription Business in Any Industry by John Warrillow

Airbnb, airport security, Amazon Web Services, asset allocation, barriers to entry, call centre, cloud computing, commoditize, David Heinemeier Hansson, discounted cash flows, high net worth, Jeff Bezos, Network effects, passive income, rolodex, sharing economy, side project, Silicon Valley, Silicon Valley startup, software as a service, statistical model, Steve Jobs, Stewart Brand, subscription business, telemarketer, time value of money, zero-sum game, Zipcar

We’ll discuss why automatic customers buy more than one-shot customers and why subscription revenue is stickier than a one-time purchase. Part Two is divided into minichapters on the nine subscription business models. As you’ll see, you have a variety of choices when it comes to building a recurring revenue stream for your business. Whether you want to transform your entire business or just pick up a few thousand dollars of passive income, you’ll get a ton of new ideas for applying the subscription model to your company. The third and final section of The Automatic Customer gives you the blueprint for building your subscription business. We’ll discuss a handful of key statistics that will define the viability of your subscription and highlight one ratio you must achieve in order to scale up. We’ll look at the psychology of selling your subscription and how to overcome something I call “subscription fatigue.”


pages: 179 words: 59,704

Meet the Frugalwoods: Achieving Financial Independence Through Simple Living by Elizabeth Willard Thames

"side hustle", Airbnb, asset allocation, barriers to entry, basic income, buy and hold, carbon footprint, delayed gratification, dumpster diving, East Village, financial independence, hedonic treadmill, IKEA effect, index fund, indoor plumbing, loss aversion, McMansion, mortgage debt, passive income, payday loans, risk tolerance, Stanford marshmallow experiment, universal basic income, working poor

I think it’s telling that, despite a capacity to own more rental properties, Nate and I choose to stick with just this one. In many cases, there’s a lot of risk and volatility involved with serving as a landlord, although it’s also true that the return can be much greater than what one would experience in the stock market. All that is to say, it’s another avenue for investing and generating passive income, but one that should be exhaustively researched. A donor advised fund. Nate and I have a donor advised fund (DAF), which is a tax-advantaged vehicle through which we contribute to charities every year. DAFs allow donors to take a tax deduction for the full amount of their contribution to their fund in the calendar year that the contribution was made. In light of this, it’s wise to start a DAF, and to deposit a significant amount of money into it during a high tax year for your family, as it reduces your taxable income for that year.


pages: 194 words: 59,336

The Simple Path to Wealth: Your Road Map to Financial Independence and a Rich, Free Life by J L Collins

"side hustle", asset allocation, Bernie Madoff, buy and hold, compound rate of return, diversification, financial independence, full employment, German hyperinflation, index fund, money market fund, nuclear winter, passive income, payday loans, risk tolerance, Vanguard fund, yield curve

Sometime in the next few years we will have two nice new income streams coming online in the form of Social Security. Most importantly, I know I’m well under the 6-7% level that requires close attention. Given the above, going forward my guess is it will drop to under 4%. Within that 3-7% range, the key to choosing your own rate has less to do with the numbers than with your personal flexibility. If as needed you can readily adjust your living expenses, find work to supplement your passive income and/or are willing and able to comfortably relocate to less expensive places, you will have a far more secure retirement no matter what rate you choose. Happier too I’d guess. If you are locked into certain income needs, unwilling or unable to ever work again and your roots go too deep to ever seek out greener pastures, you’ll need to be much more careful. Personally, I’d work on adjusting those attitudes.


pages: 192 words: 72,822

Freedom Without Borders by Hoyt L. Barber

accounting loophole / creative accounting, Affordable Care Act / Obamacare, Albert Einstein, banking crisis, diversification, El Camino Real, estate planning, fiat currency, financial independence, fixed income, high net worth, illegal immigration, interest rate swap, money market fund, obamacare, offshore financial centre, passive income, quantitative easing, reserve currency, road to serfdom, selective serotonin reuptake inhibitor (SSRI), too big to fail

Expat Haven, Tax, and Incentives Guide 111 Embassy: Brazilian Embassy, 3006 Massachusetts Avenue, N.W., Washington, D.C. Telephone (202) 238-2700. Website: www.brasilemb.org. Costa Rica Tourist Stay: Visa required for stays up to 90 days. Passport/Residency: Two types of residency programs: (1) Retired persons who bring in more than US $600 a month from an established retirement plan for at least five years; (2) a person with a guaranteed passive income from a recognized source of at least US $1,000 a month for the same period. These sums must be converted into the local currency at the official exchange rate. Dual citizenship is acceptable. The new resident is required to at least spend four months of the year in the country. Taxes: Foreign-source income is tax exempt, but if you earn income within Costa Rica, you will be subject to its income tax law and taxed on income and profits accordingly.


pages: 256 words: 15,765

The New Elite: Inside the Minds of the Truly Wealthy by Dr. Jim Taylor

British Empire, business cycle, call centre, dark matter, Donald Trump, estate planning, full employment, glass ceiling, income inequality, Jeff Bezos, longitudinal study, Louis Pasteur, Maui Hawaii, McMansion, means of production, passive income, performance metric, plutocrats, Plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, Ronald Reagan, stealth mode startup, Steve Jobs, Thorstein Veblen, trickle-down economics, women in the workforce, zero-sum game

Less well known, but with almost an equal impact, have been changes in the financial markets and government regulation. Set aside your political preconceptions: Much of it started with the ‘‘Reagan Revolution.’’ On August 23, 1981, the Reagan administra- The Wealth of the Nation 37 tion changed the American tax code in a way that fostered capital markets. Essentially, the top tax rate for unearned income (passive income from investments) was reduced from a little over 70 percent to either the top tax rate for earned income if the investor is a ‘‘partner’’ in a company, or to the top tax rate for capital gains if the investor is ‘‘passive’’—that is, plays no management role in a company. These changes, seemingly obscure, shifted the risks of investing. Losses were now completely deductible and could be carried forward to a more advantageous tax year.


pages: 300 words: 76,638

The War on Normal People: The Truth About America's Disappearing Jobs and Why Universal Basic Income Is Our Future by Andrew Yang

3D printing, Airbnb, assortative mating, augmented reality, autonomous vehicles, basic income, Ben Horowitz, Bernie Sanders, call centre, corporate governance, cryptocurrency, David Brooks, Donald Trump, Elon Musk, falling living standards, financial deregulation, full employment, future of work, global reserve currency, income inequality, Internet of things, invisible hand, Jeff Bezos, job automation, John Maynard Keynes: technological unemployment, Khan Academy, labor-force participation, longitudinal study, low skilled workers, Lyft, manufacturing employment, Mark Zuckerberg, megacity, Narrative Science, new economy, passive income, performance metric, post-work, quantitative easing, reserve currency, Richard Florida, ride hailing / ride sharing, risk tolerance, Ronald Reagan, Sam Altman, self-driving car, shareholder value, Silicon Valley, Simon Kuznets, single-payer health, Stephen Hawking, Steve Ballmer, supercomputer in your pocket, technoutopianism, telemarketer, The Wealth of Nations by Adam Smith, Tyler Cowen: Great Stagnation, Uber and Lyft, uber lyft, unemployed young men, universal basic income, urban renewal, white flight, winner-take-all economy, Y Combinator

Either work is a core of the human experience and we’ll do it even if we don’t necessarily have to, or work is something we have no interest in doing and we do it only to survive. Setting a Freedom Dividend of $12,000 a year would enable one to barely scrape by. Anyone who wants to accomplish anything, buy something nice, or build a better life for their children will still have to work. Twelve thousand dollars a year is the equivalent of having $300,000 in savings and then living off the passive income at 4 percent a year. Have you ever heard of someone who gathered $300,000 and then just stopped working? I haven’t. I have seen many people who saved some money and then wanted to save more. Andy Stern jokes that most of the upper-middle-class children he knows have something called “parental basic income”: their lives are partially subsidized by their parents. Cell phone bills, rent guarantees, family trips and vacations, and so on all come out of the Bank of Mom and Dad.


pages: 237 words: 74,109

Uncanny Valley: A Memoir by Anna Wiener

autonomous vehicles, back-to-the-land, basic income, blockchain, Burning Man, call centre, charter city, cloud computing, cognitive bias, cognitive dissonance, commoditize, crowdsourcing, cryptocurrency, Extropian, future of work, Golden Gate Park, housing crisis, Jane Jacobs, job automation, knowledge worker, Lean Startup, means of production, medical residency, new economy, New Urbanism, passive income, pull request, rent control, ride hailing / ride sharing, Sand Hill Road, self-driving car, sharing economy, side project, Silicon Valley, Silicon Valley startup, social web, South of Market, San Francisco, special economic zone, technoutopianism, telepresence, telepresence robot, union organizing, universal basic income, unpaid internship, urban planning, urban renewal, women in the workforce, Y2K, young professional

Four of the six apartments in my rent-controlled building were occupied by middle-aged couples, some of whom had been there since at least the last boom; they were familiar with the rhetoric of community and revolution, had heard it all before. The recent flood of euphoric young people in pursuit of professional adventure, and the flood of cash that followed, was stressful, not impressive. I suspected no one in our building was in the market for a passive-income property, or a million-dollar condo. I suspected they all just wanted to stay. The real estate brochures came hard and fast. They began to address the building’s owner, who did not live there, and offered enticements to flip. Hi neighbor! they chirped. I wanted to share the big news about recently sold homes in your area. We have considered and ready buyers eager to invest in your neighborhood.


pages: 230 words: 76,655

Choose Yourself! by James Altucher

Airbnb, Albert Einstein, Bernie Madoff, bitcoin, cashless society, cognitive bias, dark matter, Elon Musk, estate planning, Mark Zuckerberg, money market fund, Network effects, new economy, PageRank, passive income, pattern recognition, payday loans, Peter Thiel, Ponzi scheme, Rodney Brooks, rolodex, Saturday Night Live, sharing economy, short selling, side project, Silicon Valley, Skype, software as a service, Steve Jobs, superconnector, Uber for X, Vanguard fund, Y2K, Zipcar

It costs almost nothing to start a business. Find something people want and start posting information about it on a blog and then upsell your services on the blog. Or write 1000 small books about different topics and publish them on Amazon. You can do this on the side while you learn and have a full time job and then when you are ready, you can jump to your other passive streams of income. Note: It takes a lot of work to find “passive” income but when it happens, it’s worth it. These are some ideas. There are many others. 2. Invest in experiences rather than possessions. Figure out interesting and unique experiences you can have or places you can go to (but they don’t always have to be places). Experiences pay much higher dividends than an extra TV or a nicer car. 3. Books. Reading is the best return on investment. You have to live your entire life in order to know one life.


Green Economics: An Introduction to Theory, Policy and Practice by Molly Scott Cato

Albert Einstein, back-to-the-land, banking crisis, banks create money, basic income, Bretton Woods, Buy land – they’re not making it any more, carbon footprint, central bank independence, clean water, Community Supported Agriculture, congestion charging, corporate social responsibility, David Ricardo: comparative advantage, deskilling, energy security, food miles, Food sovereignty, Fractional reserve banking, full employment, gender pay gap, income inequality, informal economy, Intergovernmental Panel on Climate Change (IPCC), job satisfaction, land reform, land value tax, Mahatma Gandhi, market fundamentalism, mortgage debt, passive income, peak oil, price stability, profit maximization, profit motive, purchasing power parity, race to the bottom, reserve currency, the built environment, The Spirit Level, Tobin tax, University of East Anglia, wikimedia commons

The weakness of many of these schemes was that certain services were readily available, aromatherapy and dog-walking are the MONEY 81 BOX 5.2 THE PARABLE OF THE SOUTH AFRICAN TALENTS Cometh the hour, cometh the complementary currency. When apparently logical man-made systems create obviously unnecessary suffering, humans can sometimes take a step back, spot the defect and correct it, starting at local level. So it is with the money system. Currently it is clearly cruel and dangerous, leaving millions of people out while trillions of money is hoarded and unstable bubbles of ‘derived’ money, debt and ‘passive income’ streams abound. South Africa has one of the most sophisticated systems of trading through complementary currencies in the world, including widespread LETS systems. A nationwide alternative currency, based in Cape Town, is the Talent Exchange. Talents are traded in Cape Town between some 2000 members. Talents are valued roughly equivalent to the national currency. Since 2003, when the system was set up, about 2.5 million talents have been traded – equivalent to R2,500,000.


pages: 305 words: 79,303

The Four: How Amazon, Apple, Facebook, and Google Divided and Conquered the World by Scott Galloway

activist fund / activist shareholder / activist investor, additive manufacturing, Affordable Care Act / Obamacare, Airbnb, Amazon Web Services, Apple II, autonomous vehicles, barriers to entry, Ben Horowitz, Bernie Sanders, big-box store, Bob Noyce, Brewster Kahle, business intelligence, California gold rush, cloud computing, commoditize, cuban missile crisis, David Brooks, disintermediation, don't be evil, Donald Trump, Elon Musk, follow your passion, future of journalism, future of work, global supply chain, Google Earth, Google Glasses, Google X / Alphabet X, Internet Archive, invisible hand, Jeff Bezos, Jony Ive, Khan Academy, longitudinal study, Lyft, Mark Zuckerberg, meta analysis, meta-analysis, Network effects, new economy, obamacare, Oculus Rift, offshore financial centre, passive income, Peter Thiel, profit motive, race to the bottom, RAND corporation, ride hailing / ride sharing, risk tolerance, Robert Mercer, Robert Shiller, Robert Shiller, Search for Extraterrestrial Intelligence, self-driving car, sentiment analysis, shareholder value, Silicon Valley, Snapchat, software is eating the world, speech recognition, Stephen Hawking, Steve Ballmer, Steve Jobs, Steve Wozniak, Stewart Brand, supercomputer in your pocket, Tesla Model S, Tim Cook: Apple, Travis Kalanick, Uber and Lyft, Uber for X, uber lyft, undersea cable, Whole Earth Catalog, winner-take-all economy, working poor, young professional

Nobody becomes superwealthy through paychecks—it takes equity in growing assets to create real wealth. Just compare the net worth of CEOs to the founders of their companies. Cash compensation will improve your lifestyle, but not your wealth—it isn’t enough, and saving is counterintuitive and just plain hard. High-income individuals tend to flock together, and what we see, we covet. It’s surprisingly easy to get used to business class. The definition of rich is when your passive income exceeds your nut (what you need to live). My dad, collecting $45,000 in social security and cash flow from investments, is rich, as he spends $40,000/year. I have several friends in finance who make seven figures who are not rich, as the moment they stop working, they are shit out of luck. The path to rich(es) is a path of living below your means and investing in income-producing assets. Rich is more a function of discipline than how much you make.


pages: 286 words: 87,168

Less Is More: How Degrowth Will Save the World by Jason Hickel

air freight, Airbnb, basic income, Bernie Sanders, Big bang: deregulation of the City of London, Boris Johnson, Bretton Woods, British Empire, capital controls, cognitive dissonance, coronavirus, corporate governance, corporate personhood, COVID-19, David Graeber, decarbonisation, declining real wages, deindustrialization, dematerialisation, Elon Musk, energy transition, Fellow of the Royal Society, Fractional reserve banking, Francis Fukuyama: the end of history, full employment, gender pay gap, income inequality, Intergovernmental Panel on Climate Change (IPCC), invention of the steam engine, James Watt: steam engine, Jeff Bezos, John Maynard Keynes: Economic Possibilities for our Grandchildren, land reform, liberal capitalism, longitudinal study, Mahatma Gandhi, Mark Zuckerberg, McMansion, means of production, meta analysis, meta-analysis, microbiome, moral hazard, mortgage debt, Naomi Klein, new economy, offshore financial centre, oil shale / tar sands, out of africa, passive income, planetary scale, plutocrats, Plutocrats, quantitative easing, rent control, rent-seeking, Ronald Reagan, Scramble for Africa, secular stagnation, shareholder value, sharing economy, Simon Kuznets, structural adjustment programs, the scientific method, The Spirit Level, transatlantic slave trade, trickle-down economics, universal basic income

The bottom 50% have almost nothing: only 0.4%.37 On a global level the disparities are even worse: the richest 1% have nearly 50% of the world’s wealth. The problem with this kind of inequality is that the rich become extractive rentiers. As they accumulate money and property far beyond what they could ever use, they rent it out (be it residential or commercial properties, patent licences, loans, whatever). And because they have a monopoly on these things, everyone else is forced to pay them rents and debts. This is called ‘passive income’, because it accrues automatically to people who hold capital without any labour on their part. But from the perspective of everyone else it is anything but passive: people have to scramble to work and earn above and beyond what they would otherwise need, simply in order to pay rents and debts to the rich. It is like modern-day serfdom. And just like serfdom, it has serious implications for our living world.


pages: 669 words: 210,153

Tools of Titans: The Tactics, Routines, and Habits of Billionaires, Icons, and World-Class Performers by Timothy Ferriss

Airbnb, Alexander Shulgin, artificial general intelligence, asset allocation, Atul Gawande, augmented reality, back-to-the-land, Ben Horowitz, Bernie Madoff, Bertrand Russell: In Praise of Idleness, Black Swan, blue-collar work, Boris Johnson, Buckminster Fuller, business process, Cal Newport, call centre, Charles Lindbergh, Checklist Manifesto, cognitive bias, cognitive dissonance, Colonization of Mars, Columbine, commoditize, correlation does not imply causation, David Brooks, David Graeber, diversification, diversified portfolio, Donald Trump, effective altruism, Elon Musk, fault tolerance, fear of failure, Firefox, follow your passion, future of work, Google X / Alphabet X, Howard Zinn, Hugh Fearnley-Whittingstall, Jeff Bezos, job satisfaction, Johann Wolfgang von Goethe, John Markoff, Kevin Kelly, Kickstarter, Lao Tzu, lateral thinking, life extension, lifelogging, Mahatma Gandhi, Marc Andreessen, Mark Zuckerberg, Mason jar, Menlo Park, Mikhail Gorbachev, MITM: man-in-the-middle, Nelson Mandela, Nicholas Carr, optical character recognition, PageRank, passive income, pattern recognition, Paul Graham, peer-to-peer, Peter H. Diamandis: Planetary Resources, Peter Singer: altruism, Peter Thiel, phenotype, PIHKAL and TIHKAL, post scarcity, post-work, premature optimization, QWERTY keyboard, Ralph Waldo Emerson, Ray Kurzweil, recommendation engine, rent-seeking, Richard Feynman, risk tolerance, Ronald Reagan, selection bias, sharing economy, side project, Silicon Valley, skunkworks, Skype, Snapchat, social graph, software as a service, software is eating the world, stem cell, Stephen Hawking, Steve Jobs, Stewart Brand, superintelligent machines, Tesla Model S, The Wisdom of Crowds, Thomas L Friedman, Wall-E, Washington Consensus, Whole Earth Catalog, Y Combinator, zero-sum game

.* Took my daily caffeine intake (read: self-medication) so high that my “resting” pulse was 120+ beats per minute. 8 to 10 cups of coffee per day at minimum. Wore the same pair of jeans for a week straight just to have a much-needed constant during weeks of chaos. Seems pretty dysfunctional, right? But, in the last 8 weeks of that same period, I also: Increased my passive income 20%+. Bought my dream house. Meditated twice per day for 20 minutes per session, without fail. That marked the first time I’d been able to meditate consistently. Ended up cutting my caffeine intake to next-to-nothing (in the last 4 weeks): usually pu-erh tea in the morning and green tea in the afternoon. With the help of my blog readers, raised $100,000+ for charity: water for my birthday.

I’d be remiss to leave out the kind folks who spent many hours educating me on the details, tech, and craft of podcasting in the beginning. Many thanks, gentlemen! Listed in alphabetical order by first name (and if I forgot anyone, please let me know): Jason DeFillippo of Grumpy Old Geeks John Lee Dumas of Entrepreneur on Fire Jordan Harbinger of The Art of Charm Lewis Howes of The School of Greatness Matt Lieber and Alex Blumberg of Gimlet Media Pat Flynn of Smart Passive Income and Rob Walch of Libsyn Last but not least, this book is dedicated to my parents, who have guided, encouraged, loved, and consoled me through it all. I love you more than words can express. About the Author TIM FERRISS is one of Fast Company’s “Most Innovative Business People” and one of Forbes’s “Names You Need to Know.” He is an early-stage tech investor/advisor (Uber, Facebook, Alibaba, and more) and the author of three #1 New York Times and Wall Street Journal betsellers: The 4-Hour Workweek, The 4-Hour Body, and The 4-Hour Chef.


pages: 327 words: 90,542

The Age of Stagnation: Why Perpetual Growth Is Unattainable and the Global Economy Is in Peril by Satyajit Das

"Robert Solow", 9 dash line, accounting loophole / creative accounting, additive manufacturing, Airbnb, Albert Einstein, Alfred Russel Wallace, Anton Chekhov, Asian financial crisis, banking crisis, Berlin Wall, bitcoin, Bretton Woods, BRICs, British Empire, business cycle, business process, business process outsourcing, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Clayton Christensen, cloud computing, collaborative economy, colonial exploitation, computer age, creative destruction, cryptocurrency, currency manipulation / currency intervention, David Ricardo: comparative advantage, declining real wages, Deng Xiaoping, deskilling, disintermediation, disruptive innovation, Downton Abbey, Emanuel Derman, energy security, energy transition, eurozone crisis, financial innovation, financial repression, forward guidance, Francis Fukuyama: the end of history, full employment, gig economy, Gini coefficient, global reserve currency, global supply chain, Goldman Sachs: Vampire Squid, happiness index / gross national happiness, Honoré de Balzac, hydraulic fracturing, Hyman Minsky, illegal immigration, income inequality, income per capita, indoor plumbing, informal economy, Innovator's Dilemma, intangible asset, Intergovernmental Panel on Climate Change (IPCC), Jane Jacobs, John Maynard Keynes: technological unemployment, Kenneth Rogoff, knowledge economy, knowledge worker, light touch regulation, liquidity trap, Long Term Capital Management, low skilled workers, Lyft, Mahatma Gandhi, margin call, market design, Marshall McLuhan, Martin Wolf, Mikhail Gorbachev, mortgage debt, mortgage tax deduction, new economy, New Urbanism, offshore financial centre, oil shale / tar sands, oil shock, old age dependency ratio, open economy, passive income, peak oil, peer-to-peer lending, pension reform, plutocrats, Plutocrats, Ponzi scheme, Potemkin village, precariat, price stability, profit maximization, pushing on a string, quantitative easing, race to the bottom, Ralph Nader, Rana Plaza, rent control, rent-seeking, reserve currency, ride hailing / ride sharing, rising living standards, risk/return, Robert Gordon, Ronald Reagan, Satyajit Das, savings glut, secular stagnation, seigniorage, sharing economy, Silicon Valley, Simon Kuznets, Slavoj Žižek, South China Sea, sovereign wealth fund, TaskRabbit, The Chicago School, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, the market place, the payments system, The Spirit Level, Thorstein Veblen, Tim Cook: Apple, too big to fail, total factor productivity, trade route, transaction costs, uber lyft, unpaid internship, Unsafe at Any Speed, Upton Sinclair, Washington Consensus, We are the 99%, WikiLeaks, Y2K, Yom Kippur War, zero-coupon bond, zero-sum game

In 2012, among developed economies, the US had the highest share of relatively low-paying jobs, primarily in leisure, healthcare, and hospitality. Over recent decades, these forces, combined with the decline in unionization and the power of organized labor, increased income inequality. The concentrated ownership of property, financial assets, and investments is linked to inequality. The share of passive income, such as interest, dividends, rents, and profits, while volatile, has increased over time, relative to income from labor. In 2010, the wealthiest 10 percent of US households owned 70 percent of all wealth, while the top 1 percent owned 35 percent. The bottom 50 percent of households owned 5 percent. The richest eighty-five people in the world, which includes Bill Gates, Warren Buffett, Carlos Slim, and Jack Ma, are wealthier than the poorest 3.5 billion people on the planet.


pages: 339 words: 95,270

Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace by Matthew C. Klein

Albert Einstein, Asian financial crisis, asset allocation, asset-backed security, Berlin Wall, Bernie Sanders, Branko Milanovic, Bretton Woods, British Empire, business climate, business cycle, capital controls, centre right, collective bargaining, currency manipulation / currency intervention, currency peg, David Ricardo: comparative advantage, deglobalization, deindustrialization, Deng Xiaoping, Donald Trump, Double Irish / Dutch Sandwich, Fall of the Berlin Wall, falling living standards, financial innovation, financial repression, fixed income, full employment, George Akerlof, global supply chain, global value chain, illegal immigration, income inequality, intangible asset, invention of the telegraph, joint-stock company, land reform, Long Term Capital Management, Malcom McLean invented shipping containers, manufacturing employment, Martin Wolf, mass immigration, Mikhail Gorbachev, money market fund, mortgage debt, New Urbanism, offshore financial centre, oil shock, open economy, paradox of thrift, passive income, reserve currency, rising living standards, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, Scramble for Africa, sovereign wealth fund, The Nature of the Firm, The Wealth of Nations by Adam Smith, Tim Cook: Apple, trade liberalization, Wolfgang Streeck

The Revenue Act of 1962 tried to split the difference by distinguishing between income from foreign subsidiaries that came from “active business” and income that was “passive.” Profits earned from selling goods made in factories located abroad would not be taxed by the U.S. government as long as those profits were reinvested in the foreign operation. American companies would have to pay taxes only on profits sent home via dividends, debt buybacks, or mergers and acquisitions. The resulting subpart F of the Internal Revenue Code penalized so-called passive income. Dividends and interest earned from investment portfolios would be taxed at U.S. rates by the federal government regardless of whether those profits were reinvested abroad or repatriated immediately to American investors. Crucially, income from royalties and licenses was considered passive. American companies would pay the full U.S. corporate tax rate on any income earned from their patents regardless of where they claimed those patents were located in their corporate structure.27 Everything changed in 1996 with Treasury Decision 8697.


Work Less, Live More: The Way to Semi-Retirement by Robert Clyatt

asset allocation, backtesting, buy and hold, delayed gratification, diversification, diversified portfolio, employer provided health coverage, estate planning, Eugene Fama: efficient market hypothesis, financial independence, fixed income, future of work, index arbitrage, index fund, lateral thinking, Mahatma Gandhi, McMansion, merger arbitrage, money market fund, mortgage tax deduction, passive income, rising living standards, risk/return, Silicon Valley, Thorstein Veblen, transaction costs, unpaid internship, upwardly mobile, Vanguard fund, working poor, zero-sum game

And finally, by simply operating at lower dollar levels, you qualify for the lowest tax brackets and rates. chapter 5 | Stop Worrying About Taxes | 243 Receive Less Salary or Earned Income Most semi-retirees, even those who continue to work part time, have left their high salary-earning days behind and rely instead on interest, dividends, and capital gains for much of their income. These types of passive income all come with a lower tax bite than does salary income. Those earning salary, wages, or other income not only have state and federal income taxes to pay, which can be at combined marginal rates over 40%, but also have growing Medicare and Social Security taxes taken directly out of their paychecks. In 2007, that amounted to 7.65% on up to $97,500 of income or $7,435 per year, with no limit on the income subject to Medicare taxes, which are now running at 1.4%.


pages: 305 words: 98,072

How to Own the World: A Plain English Guide to Thinking Globally and Investing Wisely by Andrew Craig

Airbnb, Albert Einstein, asset allocation, Berlin Wall, bitcoin, Black Swan, bonus culture, BRICs, business cycle, collaborative consumption, diversification, endowment effect, eurozone crisis, failed state, Fall of the Berlin Wall, financial deregulation, financial innovation, index fund, information asymmetry, joint-stock company, Joseph Schumpeter, Long Term Capital Management, low cost airline, mortgage debt, negative equity, Northern Rock, offshore financial centre, oil shale / tar sands, oil shock, passive income, pensions crisis, quantitative easing, road to serfdom, Robert Shiller, Robert Shiller, Silicon Valley, smart cities, stocks for the long run, the new new thing, The Wealth of Nations by Adam Smith, Yogi Berra, Zipcar

First, as we saw in the section on compound interest, with a long-term commitment to doing the best with your money you really can aspire to turn relatively small amounts of money into large amounts. All you need is time (I would say at least ten years), a modicum of knowledge and a bit of effort in terms of taking care of the necessary administration. Second, and to link to the first point, the example above is looking only at passive income – that is to say the “perfect world” scenario of you being able to live your life entirely funded by the money you make from your money. In reality, we will all likely spend several decades of our life working in some shape or form. This is important because your active income (the money you are paid for your work) can obviously make up a huge component of the costs of your dream lifestyle during the decades you work.


All About Asset Allocation, Second Edition by Richard Ferri

activist fund / activist shareholder / activist investor, asset allocation, asset-backed security, barriers to entry, Bernie Madoff, buy and hold, capital controls, commoditize, commodity trading advisor, correlation coefficient, Daniel Kahneman / Amos Tversky, diversification, diversified portfolio, equity premium, estate planning, financial independence, fixed income, full employment, high net worth, Home mortgage interest deduction, implied volatility, index fund, intangible asset, Long Term Capital Management, Mason jar, money market fund, mortgage tax deduction, passive income, pattern recognition, random walk, Richard Thaler, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Robert Shiller, selection bias, Sharpe ratio, stocks for the long run, survivorship bias, too big to fail, transaction costs, Vanguard fund, yield curve

The couple’s 50-year commingled allocation age is quite different from their chronological age; however, it may be more appropriate for their situation. Another example: assume the case of two 55-year-old female investors. How do we differentiate the special needs of each person? The questions to ask cover a wide range of issues, such as income needs, retirement needs, pensions, current and forecasted living expenses, bequeathing goals, passive income sources, the degree of detachment (i.e., risk tolerance), and so on. These real-life variables will dramatically affect each woman’s asset allocation. The chronological age-based allocation of 55 percent in bonds may be a good starting point or baseline allocation model. There are a number of life variables that will ultimately determine the allocation age of the investor. Assume that one of the 55-year-old women is barely getting by financially and that the other is doing very well.


pages: 346 words: 97,330

Ghost Work: How to Stop Silicon Valley From Building a New Global Underclass by Mary L. Gray, Siddharth Suri

Affordable Care Act / Obamacare, Amazon Mechanical Turk, augmented reality, autonomous vehicles, barriers to entry, basic income, big-box store, bitcoin, blue-collar work, business process, business process outsourcing, call centre, Capital in the Twenty-First Century by Thomas Piketty, cloud computing, collaborative consumption, collective bargaining, computer vision, corporate social responsibility, crowdsourcing, data is the new oil, deindustrialization, deskilling, don't be evil, Donald Trump, Elon Musk, employer provided health coverage, en.wikipedia.org, equal pay for equal work, Erik Brynjolfsson, financial independence, Frank Levy and Richard Murnane: The New Division of Labor, future of work, gig economy, glass ceiling, global supply chain, hiring and firing, ImageNet competition, industrial robot, informal economy, information asymmetry, Jeff Bezos, job automation, knowledge economy, low skilled workers, low-wage service sector, market friction, Mars Rover, natural language processing, new economy, passive income, pattern recognition, post-materialism, post-work, race to the bottom, Rana Plaza, recommendation engine, ride hailing / ride sharing, Ronald Coase, Second Machine Age, sentiment analysis, sharing economy, Shoshana Zuboff, side project, Silicon Valley, Silicon Valley startup, Skype, software as a service, speech recognition, spinning jenny, Stephen Hawking, The Future of Employment, The Nature of the Firm, transaction costs, two-sided market, union organizing, universal basic income, Vilfredo Pareto, women in the workforce, Works Progress Administration, Y Combinator

Workers on LeadGenius had even higher rates of referrals, suggesting that word-of-mouth employer recommendations cut across platforms.4 Workers share tips about tasks via phone, forums, chat, Facebook, and even in person, especially if they pay well. Likewise, names of requesters (aka employers) who are fair and reliable often circulate among on-demand workers. Sanjeev, 22, is a student in Kerala who makes money by working on MTurk and maintaining several blogs on love and friendship that generate passive income through Google AdWords.5 He first learned about MTurk from a friend in his computer applications course. He likes MTurk because he can do it part-time. He often keeps an eye out for late-night tasks, something he can do while he studies. When he sees a promising job pop up, he shares the news with his friend. He says, “If I’m working and find a good HIT [job], I call him and tell him about it.”


pages: 289

Hustle and Gig: Struggling and Surviving in the Sharing Economy by Alexandrea J. Ravenelle

"side hustle", active transport: walking or cycling, Affordable Care Act / Obamacare, Airbnb, Amazon Mechanical Turk, barriers to entry, basic income, Broken windows theory, call centre, Capital in the Twenty-First Century by Thomas Piketty, cashless society, Clayton Christensen, clean water, collaborative consumption, collective bargaining, creative destruction, crowdsourcing, disruptive innovation, Downton Abbey, East Village, Erik Brynjolfsson, full employment, future of work, gig economy, Howard Zinn, income inequality, informal economy, job automation, low skilled workers, Lyft, minimum wage unemployment, Mitch Kapor, Network effects, new economy, New Urbanism, obamacare, Panopticon Jeremy Bentham, passive income, peer-to-peer, peer-to-peer model, performance metric, precariat, rent control, ride hailing / ride sharing, Ronald Reagan, sharing economy, Silicon Valley, strikebreaker, TaskRabbit, telemarketer, the payments system, Tim Cook: Apple, transaction costs, Travis Kalanick, Triangle Shirtwaist Factory, Uber and Lyft, Uber for X, uber lyft, ubercab, universal basic income, Upton Sinclair, urban planning, very high income, white flight, working poor, Zipcar

Joshua would probably never consider cleaning houses for a living or working as a hotel’s front desk clerk, but as a short-term side hustle it has its appeal. At the end of our interview, he noted that he was moving cross-country and hiring his fiancée’s undocumented immigrant mother to manage the key distribution and cleaning. As he put it, he and his business partner “want to do as little manual labor as possible, turn [Airbnb listings] into passive income.” RACE OR CLASS? Is this brushing off of the social contract an issue of socioeconomic or racial inequities? As noted previously, discrimination has been documented among sharing economy services such as Airbnb, Craigslist, and eBay.75 However, when it comes to the treatment of workers, it’s not certain to what extent the issue is race-based or class-based. There are three main areas in which the experiences of workers may be affected by race: working in the sharing economy, using platforms as a client, and experiencing increased levels of risk and exploitation.


pages: 426 words: 105,423

The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich by Timothy Ferriss

Albert Einstein, Amazon Mechanical Turk, call centre, clean water, Donald Trump, en.wikipedia.org, Firefox, fixed income, follow your passion, game design, global village, Iridium satellite, knowledge worker, late fees, lateral thinking, Maui Hawaii, oil shock, paper trading, Parkinson's law, passive income, peer-to-peer, pre–internet, Ralph Waldo Emerson, remote working, risk tolerance, Ronald Reagan, side project, Silicon Valley, Silicon Valley startup, Skype, Steve Jobs, Vilfredo Pareto, wage slave, William of Occam

-midnight in a campsite with no other distractions, (c) outsourcing everything that I would find difficult or time consuming (like the tricky programming stuff and the illustrations for my book). After about four weeks I had an automated informational website that had replaced ½ of my full-time income—requiring > four hours per week to maintain. The original plan was to arrive in Adelaide and get a J.O.B. But with my passive income, I decided to simply grow my new business and am currently very close to replacing 100% of my previous income. It feels f&*#ing brilliant. Now we plan to travel the world slowly until the kids are ready for primary school… Who says kids hold you back?! —FINN WORKING REMOTELY One month and one year ago, I read 4HWW on the recommendation of my sister’s boyfriend after I had been talking for months about changing my life drastically and moving to Argentina to learn Castellano.


pages: 429 words: 120,332

Treasure Islands: Uncovering the Damage of Offshore Banking and Tax Havens by Nicholas Shaxson

Asian financial crisis, asset-backed security, bank run, battle of ideas, Bernie Madoff, Big bang: deregulation of the City of London, Bretton Woods, British Empire, business climate, call centre, capital controls, collapse of Lehman Brothers, computerized trading, corporate governance, corporate social responsibility, creative destruction, Credit Default Swap, David Ricardo: comparative advantage, Double Irish / Dutch Sandwich, failed state, financial deregulation, financial innovation, Fractional reserve banking, full employment, high net worth, income inequality, Kenneth Rogoff, laissez-faire capitalism, land reform, land value tax, light touch regulation, Long Term Capital Management, Martin Wolf, money market fund, New Journalism, Northern Rock, offshore financial centre, oil shock, old-boy network, out of africa, passive income, plutocrats, Plutocrats, Ponzi scheme, race to the bottom, regulatory arbitrage, reserve currency, Ronald Reagan, shareholder value, The Spirit Level, too big to fail, transfer pricing, Washington Consensus

The Kennedy administration had enacted Subpart F of the Code in 1962, which defended against tax havens by curbing deferral of U.S. corporate taxes in certain situations, deeming the income of foreign subsidiaries and affiliates of U.S. corporations to have been distributed to the U.S. parent and taxed in the U.S. even though this income is not actually distributed. 13.Some countries have limited defenses against deferral; so-called “Subpart F” legislation in the United States (disallowing deferral on passive income) is an example. Even this defense is patchy, however, and developing nations usually find it impossible to construct meaningful defenses using this strategy. 14.David Cay Johnston, Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich—and Cheat Everybody Else (New York: Penguin, 2003). 15.Eric Helleiner, States and the Reemergence of Global Finance: From Bretton Woods to the 1990s (Ithaca, NY: Cornell University Press, 1996), pp. 135–6.


pages: 426 words: 115,150

Your Money or Your Life: 9 Steps to Transforming Your Relationship With Money and Achieving Financial Independence: Revised and Updated for the 21st Century by Vicki Robin, Joe Dominguez, Monique Tilford

asset allocation, Buckminster Fuller, buy low sell high, credit crunch, disintermediation, diversification, diversified portfolio, fiat currency, financial independence, fixed income, fudge factor, full employment, Gordon Gekko, high net worth, index card, index fund, job satisfaction, Menlo Park, money market fund, Parkinson's law, passive income, passive investing, profit motive, Ralph Waldo Emerson, Richard Bolles, risk tolerance, Ronald Reagan, Silicon Valley, software patent, strikebreaker, Thorstein Veblen, Vanguard fund, zero-coupon bond

Steve S. did his own version of this by purchasing a self-storage facility and having on-site and off-site managers run the project on a daily basis. Yes, of course, this is in part profiting from consumer excess—having more stuff than house to put it in. Whatever the irony, Steve and his family collect enough per month that he’s been able to live AND save enough to buy a second facility. Heʹs chosen a life of community service, occupying roles of significant responsibility, but he is able to be bold in his service because he has that passive income that actively supports his life. Quentin N. and his wife Irene have a real-estate story with some real ups and downs. They bought a four-plex twenty years ago, living in one unit and renting the other three. Even when they moved to a nearby city, they kept the four-plex as an income property. All well and good until the neighborhood around them deteriorated and their building deteriorated as well.


pages: 368 words: 145,841

Financial Independence by John J. Vento

Affordable Care Act / Obamacare, Albert Einstein, asset allocation, diversification, diversified portfolio, estate planning, financial independence, fixed income, high net worth, Home mortgage interest deduction, money market fund, mortgage debt, mortgage tax deduction, oil shock, Own Your Own Home, passive income, risk tolerance, the rule of 72, time value of money, transaction costs, young professional, zero day

bapp03.indd 331 26/02/13 3:06 PM 332 Appendix C Gross Income Gross income is all the income you receive during the year from whatever source. Personal gross income falls into three general categories: 1. Active income: Wages, salaries, bonuses, tips, commissions, as well as certain other forms of income including pension income and alimony. 2. Portfolio income: Interest, dividends and profits generated from most types of investment holdings, including savings accounts, stocks, bonds, mutual funds, options, and futures. 3. Passive income: Income derived from real estate, limited partnerships, and other tax shelters. Certain income may be tax exempt, including: • • • • • • Child-support payments Compensations from accident, health, and life insurance Gifts and inheritances Municipal bond interest Scholarships and fellowships Veterans benefits In addition, the amount of deductions and write-offs that taxpayers can take in certain categories are subject to a number of rules, regulations, and limitations.


pages: 504 words: 129,087

The Ones We've Been Waiting For: How a New Generation of Leaders Will Transform America by Charlotte Alter

"side hustle", 4chan, affirmative action, Affordable Care Act / Obamacare, basic income, Berlin Wall, Bernie Sanders, carbon footprint, clean water, collective bargaining, Columbine, corporate personhood, correlation does not imply causation, Credit Default Swap, crowdsourcing, David Brooks, Donald Trump, double helix, East Village, ending welfare as we know it, Fall of the Berlin Wall, feminist movement, Ferguson, Missouri, financial deregulation, Francis Fukuyama: the end of history, gig economy, glass ceiling, Google Hangouts, housing crisis, illegal immigration, immigration reform, income inequality, Intergovernmental Panel on Climate Change (IPCC), job-hopping, Kevin Kelly, knowledge economy, Lyft, mandatory minimum, Marc Andreessen, Mark Zuckerberg, mass incarceration, McMansion, medical bankruptcy, move fast and break things, move fast and break things, Nate Silver, obamacare, Occupy movement, passive income, pre–internet, race to the bottom, RAND corporation, Ronald Reagan, sexual politics, Silicon Valley, single-payer health, Snapchat, TaskRabbit, too big to fail, Uber and Lyft, uber lyft, universal basic income, unpaid internship, We are the 99%, white picket fence, working poor, Works Progress Administration

(Months later, Katie would be forced to resign from Congress after her estranged husband allegedly released intimate pictures of her with a female campaign staffer, becoming the first millennial lawmaker to resign because of leaked photos.) Most of the new young members hadn’t been getting a paycheck during their campaigns, so by the time they arrived in DC they were living off savings or fumes. Most older congressional candidates had spouses, passive income, or investment accounts to support them throughout their long unpaid campaigns—many millennial candidates didn’t. A week after AOC got to Congress, she had less than $7,000 in her savings account. She wouldn’t start getting a paycheck until after she was sworn in, so she wasn’t sure how she was going to rent an apartment in Washington, DC. She had saved a few thousand dollars from her job at the restaurant, and told The New York Times that she and her boyfriend were “squirreling away” to afford something in DC.


The Simple Living Guide by Janet Luhrs

air freight, Albert Einstein, car-free, cognitive dissonance, Community Supported Agriculture, compound rate of return, financial independence, follow your passion, Golden Gate Park, job satisfaction, late fees, money market fund, music of the spheres, passive income, Ralph Waldo Emerson, risk tolerance, telemarketer, the rule of 72, urban decay, urban renewal, Whole Earth Review

We’ve all become so specialized that we don’t even think of doing repairs ourselves. We ought to be able to call on each other when we need help. Just today I helped a neighbor repair his gutters. When you have time in your life, you can develop these kinds of relationships. The Schmidts’ frugality enabled them to retire from paid work at ages 40 and 41. They live on $25,000 a year, all the result of passive income earned from their investments and rental from the second house. The $25,000 includes regular, lengthy trips around the world, a passion they pursued throughout all the years they were building their nest egg. “Even though we had this goal of paying off our house,” Becky says, “we also wanted to broaden ourselves. One way to do that was by traveling.” Sometimes the couple traveled together, sometimes individually.